What you need to know
– Pharmacy Benefit Managers, or PBMs, are a part of five normal steps in the drug supply chain
– A Pharma expert says PBMs can contribute to drug price increases
– The Association representing PBMs says that PBMs negotiate drug prices on behalf of health insurers
Antonio Ciaccia is the president of 3 Axis Advisors, a drug pricing research and consulting firm. He says that initially, Pharmacy Benefit Managers, or PBMs were prohibiting pharmacies from telling patients that in some cases, it would cost less for a drug if was paid for out of pocket. New legislation was passed in 2017 that changed that.
“Understandably lawmakers were quite upset and in unanimous fashion said that’s not okay and that PBMs should not have licenses to bully their pharmacists into charging more than they would otherwise want to charge that patient,” Ciaccia said.
PBMs are third-party administrators that work with health insurers to negotiate drug costs. Most pharmacies are in a contract with a PBM. PBMs have been criticized for something called “clawbacks”. Clawbacks happen when a pharmacy is overpaid for a drug transaction with insurance funds, and the PBM then takes back the difference.
Ciaccia says there are a number of steps in the supply chain before you buy a prescription.
First a manufacturer makes the drug.
A wholesaler then buys it from them.
Then it’s sold to a retailer or pharmacy.
That’s when a PBM gets involved to negotiate the price on behalf of a health insurer
Then a patient buys the drug.
Ciaccia says that the price of the drug can increase during each of these steps in between.
“My impulse would be to say there are too many middle men in that supply chain, but I would argue that it is less a question of how many middle men, but what are the incentives that drive those middle men,” Ciaccia said.
The Pharmaceutical Care Management Association, or PCMA, represents PBMs. When reached for comment, They referred Spectrum News to a statement from a previous story we did on PBMs that says:
“ There are significant cost fluctuations among competing products in the generic drug market. Pharmacy benefit managers work on behalf of health plan sponsors and consumers to protect against these drug price fluctuations,” Ciaccia said.
Ciaccia says that more PBM reforms are necessary. He wants to see more regulations as to what can and cannot be in a PBM contract, and he says pharmacists should have more of a say in their PBM contract.
The Executive Director of the Ohio pharmacists association says that pharmacists should have more bargaining power on drug pricing and how much they keep on a sale.
The PCMA says in their previous statement that any reimbursements made to a PBM reflect the agreed upon amount and timeframe in the contract.
“PBMs are now in the middle of almost 90 percent of prescription drug transactions. The largest three PBM’s make up almost 80 percent of the entire marketplace at this point. So think of it this way. If I’m a pharmacist and I want access to my patients and my community, I have to accept the pbms terms in order to get access to the patient,” Ciaccia said.
The Ohio Pharmacists Association believes that clawbacks by PBMs can eat away at the bottom line of a pharmacist, and believe they may be why the number of independent Ohio pharmacies have shrunk from 1200 to around 500 since 1988.
Ciaccia tells Spectrum News a pharmacy would likely have to charge patients completely out of pocket if they didn’t work with a PBM, since insurance likely wouldn’t cover them.
