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  • Writer's picture Shannon Wightman-Girard


Though you may have never heard of them, pharmacy benefit managers (PBMs) play a critical role in the price you and I pay for prescription drugs at the pharmacy.

Like rats in a sewer, PBMs thrive on secrecy. Once the processors of prescription drug claims, today the largest PBMs are subsidiaries of the largest health insurers, helping corporations like CVS Health and UnitedHealth leap to 5th and 7th place respectively on the Fortune 500 — just behind better-known corporations like Walmart, Amazon, and Apple. Bear in mind PBMs and insurers don’t manufacture a product or provide a service. They’re simply extremely wealthy middlemen.

PBMs exert more control over the price of prescription drugs than you might imagine. They create the plan formularies, determine patient copays, and bill back the health plan payer — usually the patient’s employer — at a pre-negotiated, “capitated” rate.

The difference between what they bill the health plan payer and what they pay the pharmacy is the “spread” — and PBMs keep the spread, even if the pharmacy is reimbursed below a drug’s acquisition cost. Numerous states Medicaid analyses over the last 2 years have revealed PBMs pocketing as much as $300 million in spread pricing annually.

Think about that for a moment. That’s $300 million in taxpayer dollars over and above what pharmacies were paid, billed back to Medicaid — the payer. Here’s why it matters in Florida:

If Florida lawmakers undertook an official audit of PBMs in our state’s Medicaid program, they’d find taxpayer-subsidized health plans are being over-billed to the tune of hundreds of millions of dollars a year. From the health plan for state employees to the state workers’ compensation program — in each instance, PBMS manipulate and control prices making a huge profit at the expense of Florida taxpayers and patients while also restricting access to prescription drugs.

There already exists a precedent for saving millions in tax dollars by cutting out the middlemen.

The State of Ohio commissioned an audit of their Medicaid system and discovered their PBMs had overcharged Ohio taxpayers $225 million annually. Ohio responded by enacting legislation that will cut PBMs out of the state’s Medicaid process. New York made a similar discovery and returned its Medicaid pharmacy program back to a “fee for service” model instead of managed care, saving taxpayers at least $300 million — and experts estimate it could be closer to $400 million to be saved. A year after “carving out” their pharmacy benefits from Medicaid, West Virginia saved its taxpayers more than $30 million.

This is why PBM transparency and accountability are critical, now more than ever as our country rebounds from the devastating effects of the coronavirus on the economy.

Spread pricing is only one of the many ways PBMs drive up prescription drug prices. Their list of anti-competitive practices reads like a criminal rap sheet: extorting rebates from drugmakers; charging Company Store-like fees to pharmacies who already must be in PBM networks in order to have patients; contractually gagging pharmacies from talking to health plan payers about suspicious pricing deals with their health plans. There’s more, but you’d probably need a long evening and a stiff drink to handle it.

As long as PBMs are allowed to run the system unchecked and unregulated, neighborhood pharmacies will continue to be driven out of business. Patients, health plan payers, and the Florida government must be given transparent access to pharmacy benefit information to discern which PBM practices are counterproductive or even harmful and stop the abuse.

The State of Florida and its taxpayers have a right to know the real numbers. Trust us when we say, we can handle the truth.

Shane Abbott is the Co-owner of The Prescription Place in Defuniak Springs and Niceville, FL since 2006. He is a proud graduate of the University of Florida School of Pharmacy with a BS in Pharmacy and has been in the pharmacy business since 1998 when he first went to work at a local neighborhood pharmacy. He is the Board Vice President of Small business Pharmacies Aligned for Reform (SPAR) and is a member of the Florida Pharmacy Association. He and his wife Holley have four children and enjoy goat farming in their spare time

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