Is Pharmacy Benefit Manager Reform in Danger?
PBM Reform at a frustrating standoff despite overwhelming support.
Pharmacists and pharmacy owners are all too familiar with the challenges posed by Pharmacy Benefit Managers (PBMs) and their impact on the ability to serve your communities and maintain sustainable businesses. The fight for meaningful PBM reform has seen both progress and frustrating setbacks.
A significant development has been the introduction of the Protecting Pharmacies in Medicaid Act. This bipartisan bill, led by Senators Peter Welch (D-Vt.), Roger Marshall (R-Kan.), Mark Warner (D-Va.), and Bill Cassidy (R-La.), directly targets abusive pricing practices, specifically "spread pricing." Spread pricing occurs when PBMs charge Medicaid more for a drug than they reimburse the dispensing pharmacy, allowing the PBMs to pocket the difference.
This practice has been identified as a major contributor to the financial struggles and increasing closure rates of independent pharmacies across the country. According to a press release issued by Senator Welch’s office, between 2018 and 2021, more pharmacies closed than opened, including 28 closures in Vermont alone over the past five years. This has led to the concerning rise of "pharmacy deserts," with 21% of Vermont's census tracts falling into this category in 2022, primarily in rural areas.
The Protecting Pharmacies in Medicaid Act aims to rectify this by requiring Medicaid payments to PBMs to be passed directly through to pharmacies, excluding only legitimate administrative fees. Furthermore, the bill mandates that all pharmacies participating in state Medicaid programs report National Average Drug Acquisition Costs (NADAC) to enhance transparency in drug pricing and ensure fair reimbursements that reflect the actual cost of medications. This legislation is projected to save Medicaid an estimated $2 billion over 10 years.
Strong Bipartisan Support and Endorsements
The legislation is explicitly bipartisan, introduced by senators from both Democratic and Republican parties.
It has garnered significant support from pharmacy organizations, including:
Food Industry Association (FMI)
National Association of Specialty Pharmacy
National Association of Chain Drug Stores (NACDS)
National Community Pharmacist Association (NCPA)
However, despite this widespread agreement on the need for reform, progress in the Senate has recently stalled. Recently, a move to bring a health care package, including key PBM reforms, to the Senate floor for a vote by unanimous consent failed. This disappointment comes after elements of a similar package were stripped out of a government funding bill the previous December.
NCPA: Need for PBM Reform Is Urgent
B. Douglas Hoey, CEO of the National Community Pharmacists Association, expressed his frustration, stating, “Another swing and a miss. The Senate had a chance to pass the health care package by unanimous consent. That package included the PBM reforms so many say they support. But they whiffed again. Everyone agrees this must happen, so take the win and do it. Although we are disappointed, we urge Congress to see the copious amount of bipartisan support behind this package and take it to the floor to pass without delay.”
NCPA PBM Resources
PBM Materials
PBM Reform
Hoey has already emphasized the detrimental impact of spread pricing, noting that “Time and time again, PBMs have been caught using tactics like spread pricing to take advantage of the system, lining their pockets while harming patients and the taxpayers they are supposed to serve. Through spread pricing in Medicaid alone, PBMs can cost taxpayers hundreds of millions of dollars each year.” Hoey also expressed gratitude for the introduction of the Protecting Pharmacies in Medicaid Act, noting its potential to promote transparency and ensure fair pharmacy payments.
Steven C. Anderson, President and CEO, National Association of Chain Drug Stores made the following comment on the Protecting Pharmacies in Medicaid Act: “These are among the PBM reforms needed right away by Americans and their pharmacies. These also are among the reforms backed overwhelmingly in the Congress on a bipartisan basis. Every day that PBM reform is delayed is another day that Americans pay inflated drug prices, that care gets more remote for people and for communities, and that pharmacies are forced out of business. NACDS thanks Senators Peter Welch, Roger Marshall, Mark Warner, and Bill Cassidy and the cosponsors for their continued leadership, and urges swift action by the Congress to right these wrongs of the middlemen’s pharmaceutical benefit manipulation.”
NACDS PBM Resources
“PBM” Reform and Defending Patient Access
The current situation underscores the ongoing battle to hold PBMs accountable and create a more equitable landscape for pharmacies and patients alike. While the bipartisan support for measures like the Protecting Pharmacies in Medicaid Act is encouraging, the recent stall in the Senate highlights the need for continued advocacy and pressure on lawmakers to enact these crucial reforms without further delay. The financial viability of our pharmacies and the accessibility of vital healthcare services in our communities depend on it. PTMR