Why Pharmacy Benefit Managers Need Regulating

On Thursday, December 26, New York state Governor Cuomo vetoed the bill regulating PBMs (pharmacy benefit managers). He contradicted himself when he stated months ago that his 2020 agenda is to lower prescription cost for New Yorkers. When his proposal was unveiled, Senator James Skoufis, Chair of the Senate Investigations and Government Operations Committee, urged Governor Cuomo to sign the bill at the time it was introduced. It sat on the Govenor’s desk until December 26, when he issued the veto.

According to NNY 360, “The bill … would require PBMs to get licensed so their practices and pricing can be supervised by the state insurance and Health Departments.”

“Insurers, patients, and business owners would have had a much clearer view of exactly what they’d be paying for when it comes to the prescription drug benefit,” said Assemblyman John McDonald, also owner of a pharmacy in Cohoes.

PBMs, as they are known, are the middle-man companies that negotiate drug prices between manufacturers and health plans. The reason for PBMs is to lower health-care costs, but the independent pharmacists say they have actually driven medication costs upward and pushed some patients toward drugs that make more money for the PBM. The pharmacists said PBMs have also forced patients to use chain network pharmacies rather than their local independent pharmacy, driving small neighborhood pharmacies out of business.

In addition, there are several issues regarding PBM practices that hurt pharmacies and patients alike:

1. PBMs own automated dispensing facilities that fill and ship prescriptions requiring 90-day supplies. This is referred to as “mail order pharmacies.” These robotics-driven assembly lines don’t deliver the patient benefits of a traditional pharmacy.

2. When mail orders are sent out, the medications are exposed to extreme temperatures when left on porches or in mailboxes. This can lead them to be less effective and unsafe. For example, patients with respiratory problems who rely on their treatments to relieve acute breathing difficulties, an inaccurate medication dosage (due to very hot or very cold temperatures) can lead to serious medical consequences.

3. Mail order pharmacies make it impossible for patients to talk with a pharmacist to obtain the counseling they need. If a patient has a serious concern, waiting 48-72 hours is stressful for them to get a call back from someone who doesn’t know their medical/drug history, while the patient isn’t familiar with the pharmacist either.

4. Many mail order patients still call their pharmacists, but when PBMs and mail orders put the pharmacies out of business, where will these patients go?

According to the website for amNewYork, “PBMs can charge insurers a higher rate for claims then reimburse pharmacies at a lower level and keep the difference, in a method called ‘spread pricing.’”

“The method cost New York state around $300 million last year in its Medicaid managed care program,” according to Pharmacists Society of the State of NY.

The Times-Herald Record explains, “These groups say they and their customers have been squeezed by rising drug prices and other mandates created by the PBMs secretive negotiations.”

Which brings some questions to mind:

If a patient is told by the PBM to take a medication they’ve never tried and are taken off their current drug, who is responsible if they get seriously ill or worse? Is there any accountability by the PBM for denying the customer a medication that was proven to work for them? Would the PBM even admit it was their fault if a patient is in critical condition and be held liable in paying for the hospital and doctor’s bills?

The National Community Pharmacists Association (NCPA) says, “PBMs have engaged in anticompetitive practices to the harm of the state’s patients and small-business community pharmacies.”

NCPA CEO B. Douglas Hoey, pharmacist, says, “As a result of this veto, PBMs will be able to continue operating as largely unregulated middlemen in the drug supply chain in New York, driving up health care costs for consumers and plan sponsors.”

Pharmacists today wear more than one hat. They serve as a patient advocate and will take the time to answer questions, counsel clients if they have concerns, are the first line of defense if they catch an error a physician made and are constantly on the phone with insurance companies to sort out any discrepancies.

Pharmacists deserve better. Patients deserve better. PBMs need to be held accountable for their unethical treatment of both.