Pharmacists say insurance “brokers” are raising drug costs. A federal agency looking at corporate practices.

When Scott Newman opened the Newman family pharmacy in Chesapeake in 2013, it was a new chapter in his career as a pharmacist as he moved away from Rite Aid.

But over the years, he said, changes in the industry began to put pressure on his business until he knew he had come to the end of the road.

“There was nowhere to go but to get off,” Newman said.

The driving force that kept him out of business were what he called “take it or leave it” contracts with entities called pharmacy benefit managers, according to Neumann, president of Pharmacists United for Truth and Transparency.

“They cut me back every year — down and down and down,” he said.

Newman said the entities are “intermediaries” between drug manufacturers and pharmacies set up by drug companies to help with billing.

“Traditionally, the idea of ​​a PBM is a good one,” he said.

But they drive up pharmacy and patient costs by reducing competition as they push business toward pharmacies in their corporate umbrella as well as increasing rebates for drug manufacturers, according to Newman.

Federal Trade Commission Announce an investigation into PBMs And how they affected drug prices on June 7th after years of protest by independent pharmacists and clients.

“Although many people have never heard of pharmacy benefit managers, these powerful intermediaries have an enormous impact on the US prescription drug system,” FTC Chair Lina Khan said in the announcement. “This study will shed light on the practices of these companies and their impact on pharmacies, payers, clinicians, and patients.”

The panel will request information and records from the six largest pharmacy benefit managers and assess their relationship to insurance companies, such as Caremark and Aetna, which are owned by CVS Health, which also owns CVS Pharmacy.

The three largest benefit managers – Caremark, Express Scripts and Ascent Health Services owned by Cigna; And OptumRx, owned by UnitedHealth, captured more than 75% of the market share in 2020, according to data released in April 2021 by Drug Channels Institute, the pharmacy and distribution industry group.

PBM representatives said they would comply with the inquiry and referred requests for more information to the Association for Pharmaceutical Care Management, a pressure group and the PBM industry.

JC Scott, the association’s president and CEO, said in an emailed statement that he was “confident” that the investigation would show that benefits managers are a force that reduces prescription drug costs because they are “the only member of the prescription drug supply chain.” who tries to reduce costs to patients.

“Manufacturer price fixing is the root cause of high drug costs,” Scott said. “The most effective study of issues related to drug costs to consumers would examine the entire supply chain. PBMs hold pharmaceutical companies accountable by negotiating the lowest possible cost on behalf of consumers, and by driving and delivering the local competition that consumers demand.”

PBMs have been found not to cause insulin price hikes, but rather increased cost from drug manufacturers, according to The 2021 drug pricing report released by the US House of Representatives Oversight and Reform Committee.

Del gave up. Keith Hodges, R-Urbanna, announces about his last independent pharmacy last year in Gloucester. He said he sees pharmacy benefit managers as part of the problem with high prices.

Hodges bought his first drugstore in West Point in 1991 at the age of 25. He worked as a pharmacist for more than 30 years.

“When you try to talk to lawmakers about it,” he said, “they shine and often say ‘let the free market take care of that.’” “Well, it’s not a free market because patients have no control. It’s a free market when patients control their own premiums, co-payments etc. There is no bargaining power on their end and no bargaining power with pharmacies because they are blind contracts.”

One complication in treating PBMs in Virginia is the federal Employee Income Insurance Act, according to Hodges. However, the Supreme Court ruling was issued in December 2020, Routledge v. Pharmaceutical Care Administration Assn.allowed Arkansas law to regulate PBM payments to pharmacies and that it does not conflict with ERISA.

Hodges said he’s convening a working group to see how this decision could open the door to Virginia’s regulations on PBMs and other third-party officials in health care.

“The problem is that states are limited in what they can do so we can really try to find a way to address that under ERISA,” Hodges said.

Another issue with PBMs is spread pricing, which he discovered while reviewing explaining the benefits from a Gloucester Pharmacy patient.

“He showed me the plan was paying the plan sponsors $30, so the patient pays $10, but the plan pays the plan sponsor $30, but they only pay me $10, so there was a $20 difference on that prescription,” Hodges said. .

And when he ran the numbers for that kind of spread at his pharmacy, it was $38,000 a year from his pharmacy in Gloucester alone.

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a Virginia Department of Medicaid Services Report Submitted to the General Assembly in 2019 found that The pricing spread for the 18 months ended June 30, 2018, totaled $29 million. In Ohio, the spread generated $223.7 million for PBMs, according to A 2018 report released by the Ohio Department of Medicaid.

“The FTC really needs to look at this and peel back the layers to see what happens,” Hodges said.

Newman said the FTC investigation is “a long time coming.”

“Most of us get scammed by someone who doesn’t produce anything, doesn’t really have any oversight or legal regulation and doesn’t distribute anything and doesn’t house anything except for competing pharmacies, so you just have an entity working on both sides of the supply chain to improve it.”

Ian Munro,, 757-861-3369, Tweet embed