Florida small business pharmacies call for PBM regulations

Small business pharmacies are supporting legislation that would regulate Pharmacy Benefit Managers (PBMs). Barney Bishop, a spokesman for Small Business Pharmacies Aligned for Reform, told State of Reform that the proposed regulations would help small pharmacies survive.

Pharmacy Benefit Managers manage prescription drugs for health insurers. They often serve as the middleman between drug manufacturers and pharmacies, setting prices for drugs and calculating reimbursement. 

They are largely unregulated around the country. This allows the managers to operate unrestricted, which small pharmacies say gives them unfair advantage. Currently, PBMs are allowed to distribute drugs as they please and often favor pharmacies they own for drugs that earn higher reimbursement. This shrinks the profit margins of small business pharmacies.

There are seven PBMs Managers that operate in Florida, though three major ones dominate much of the market – Caremark (operated by CVS Health), Express Scripts (Cigna) and OptumRx (United Health Group).

Bishop explained that these companies’ large market share allows them to take advantage of smaller pharmacies. If nothing is done to regulate them, according to small business pharmacies, they will monopolize the market. He said:

“[CVS] is sending more drugs to itself than it has market share. So in the market, about 25 to 30% of stores are CVS stores. They’re sending 40.1% of all the drugs to themselves and they’re sending the most expensive drugs to their own specialty pharmacy. So that means that the less reimbursable prescription drugs are being sent to their competitors, which hurts their profit margins. That includes Walgreens, Walmart, Sam’s, Publix, Winn Dixie and grocery stores. So it’s not just neighborhood pharmacies [who are struggling], it’s everybody.”

Bishop explained that PBM reform would help small independent, neighborhood pharmacies survive.

“As it is now, because of the abusive practices by the PBM, neighborhood pharmacies are getting screwed by transaction fees that are unjustified and unregulated by unconscionable clawback provisions that can be up to a year later on drugs that have already been sold. 

Then there’s a number of other practices that the PBMs have that also have been abusive and hurtful to pharmacies, such as keeping them out of the most lucrative health plans and keeping them in the ones that are having the lowest reimbursement. Combined, all of this puts pressure on the small neighborhood pharmacies.”

Clawbacks are a process where PBMs would be able to return to a pharmacy months later and ask for part of their reimbursement back. Many small business pharmacies operate on small margins and these actions can leave them in financial trouble.

 

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Because of these practices, pharmacies associated with the large PBMs are able to force smaller profit margins on to their competitors and eventually buy them out.

The door for regulation was opened with the Rutledge v. Pharmaceutical Care Management Association (PCMA) supreme court decision, which allowed the state of Arkansas to regulate PBMs. Now many states, including Florida, have bills filed that will regulate them.

Representative Jackie Toledo filed HB 1155 in February. The bill would prohibit the practice of clawbacks. Small Business Pharmacies Aligned for Reform supports the bill, according to Bishop, along with other future regulations on PBMs.

The organization is an advocacy group that represents neighborhood pharmacists throughout Florida.