NEW ORLEANS (WVUE) – If you’re having trouble paying for prescription drugs, some independent pharmacists say so-called pharmacy middlemen are partly to blame.
A handful of pharmacy benefit management companies (PBMs) are being sued for raising the price of certain prescription drugs. The PBMs are also the source of increasing financial stress for many independent pharmacies in the US
Stephen Caillouet is a customer at a small pharmacy in the Bayou region of Louisiana. He chooses Willow Bark Pharmacy because it is close to his home and he can get his prescription quickly. One particular drug is critical to his health.
“Eliquis, it’s a blood thinner,” he said. “You take it once in the morning and once in the evening and if you stop taking it you can die. It is very important.”
Caillouet says it is also very expensive. He is retired and has a fixed income. Why the price of the drug fluctuates is beyond him.
“From January to July it’s $45. From July to December it’s $145,” Caillouet said. “I can’t afford that. But I have to do what I have to do.”
He has company. According to a recent Kaiser Family Foundation poll, one in four adults who take prescription medications have difficulty paying for them. What they may not know is how pharmacy benefit managers – the PBMs – fit into the pricing picture.
PBMs are essentially middlemen, operating between drug manufacturers, pharmacies and health insurers who determine the prices patients pay. This is done through matters such as personal contribution and deductible.
Insurance companies hire PBMs to manage the pharmacy or prescription portion of health plans. They act as gatekeepers, negotiating drug prices and compiling lists of which brands are covered. If you have health insurance, your healthcare provider likely works with a PBM or, in some cases, owns its own PBM.
CVS Caremark, Express Scripts and Optum Rx are considered the three largest PBMs in the US. They manage nearly 80 percent of prescription drug claims for approximately 270 million people. To better understand how a PBM can impact drug costs, we visited two independent pharmacies in the New Orleans metro area.
“It’s basically a middleman,” said Ella Vasquez, owner of DBS Pharmacy in Metairie. “It determines what the consumer pays and what he pays to the pharmacy. They are the ones who dictate how much we get paid, and most of the time they pay underwater, which is below our acquisition cost.”
Independent pharmacies say they have little control over the costs of the drugs they dispense because they are often set by PBMs that work with insurance companies and health care providers.(Story blocks)
Minh Nguyen owns Willow Bark Pharmacy in Chackbay, a small town in Lafourche Parish. Nguyen says PBMs control the price of many prescription drugs through a falsified list of preferred drugs, a so-called “formulary.”
“They promise you that they will save you money, that the cost of health care will go down. But instead you see the opposite. Premiums go up, benefits go down, you get less coverage on your insurance for a higher premium,” said Nguyen.
“Every year it’s a pay-to-play to be on their form. So whichever pharmaceutical companies pay the PBM the most rebate money will be on that list. So if your doctor prescribes you a certain drug and if it is not on the preferred list, it will probably be impossible for you to get the drug you want. You must take one of the medications on the list.”
According to Nguyen, these drugs are often more expensive brand names instead of cheaper generic drugs. For Alida Olson, her health insurance PBM changed the price of her daughter’s prescription. Olson says she paid $35 for it.
“I used to be able to get it for that price. But if I want to fill a prescription for 90 days or more, they want me to go to a larger pharmacy or mail order,” Olson said. “I can no longer get a recurring prescription. They placed restrictions on those recurring prescriptions. What they did next was take that drug off our preferred list. So I ended up doing mail order. And that 90-day prescription, which used to cost $35 by mail order, was brought up to $75.”
Olson lives in Metairie. She said she wants her prescriptions filled by her local pharmacist, not by mail order.
“I prefer to come to DBS Pharmacy because I can have a conversation with a pharmacist,” Olson said. “She takes the time to listen to the needs of myself and my family.”
Vasquez says PBMs are crushing independent pharmacies, sending people to drugstores, mail-order pharmacies and a list of brand-name drugs the PBMs prefer.
“We are like David fighting a big Goliath,” Vasquez said. “Many people think that pharmacies make money by providing expensive medicines. But it’s actually the opposite.” She said every independent pharmacy is “in the same boat.”
Nguyen said, “It’s not about patient care, it’s about money for them. It’s pure greed, that’s what it is.”
Nguyen has been running his pharmacy in Chackbay for seven years and says PBMs are making it harder for him to make a profit and stay in business. He said he fears he will soon have to close his doors permanently, which would leave a huge void in the small community.
“The experts call that a pharmacy desert. This means that access to care disappears,” said Nguyen. “Patients will have a harder time getting from point A to point B, and having to leave home to pick up their prescriptions.”
PBMs have been in business since the 1950s, but only recently have their practices come under scrutiny and lawsuits have been filed. In March 2023, former Louisiana Attorney General Jeff Landry sued three drug manufacturers and the three largest PBMs (Caremark, Optum Rx, Express Scripts), accusing them of driving up insulin prices for claims filed through Louisiana Medicaid.
“In the 1990s, diabetics in Louisiana could buy a bottle of insulin for about $20. Today, that same bottle costs more than $300,” Landry said at a 2023 news conference.
That lawsuit is still ongoing. In September of this year, the Federal Trade Commission filed a similar lawsuit against the three largest PBMs, alleging they used a “perverse drug discount system” that forced patients to pay more for lifesaving insulin while making millions of dollars in profits.
“These are giant corporate middlemen who wield an enormous amount of power over how much Americans pay for critical medications, which pharmacies they can go to, how much they will pay, how much the pharmacies will make,” Hannah Garden said. Monheit, director of the Office of Policy and Planning at the Federal Trade Commission. “And we are quite concerned that these middlemen are using their power to make more and more for themselves, even as patients pay more.”
The Federal Trade Commission has filed charges against the nation’s three largest pharmacy benefit managers for artificially inflating prescription drug prices at the expense of patients.(Source: CNN)
The FTC’s lawsuit comes after a two-year investigation into the PPE industry. The FTC released some of its findings in an interim report this summer. It found that PBMs operate in a deliberately convoluted and opaque manner, which Garden-Monheit said allows them to charge excessive drug prices without much pushback.
“Part of what we discovered that led to this law enforcement action is that in some cases, patients were actually paying more out of pocket for insulin than the drug even costs, which is the exact opposite of how insurance should work. she said. “You should not have to pay more than the actual cost of the medicine, so that worries us very much.
“We also examined a prostate cancer drug that cost an average of about $200 to obtain in pharmacies. What we saw in our PBM study, when we reviewed their data, was that they turn around and charge $6,000 for that drug. That’s because they own the pharmacies and, to use the words of one of the PBMs themselves in the documents they submitted, they can “aggressively” steer patients to their own pharmacies, where their costs are higher.”
Express Scripts sued the FTC over its interim report on PPE, claiming it was false, misleading and harmful to the PPE industry. In response to the FTC’s insulin lawsuit, the three defendants denied the allegations at a congressional hearing in July. The heads of Caremark, Express Scripts and Optum Rx defended their practices and blamed drug makers for the high cost of drugs.
“By 2023, we helped keep the average patient cost for a 30-day prescription at $15 for people with employer-sponsored plans,” says Dr. Adam Kautzner, president of Express Scripts.
Dr. Patrick Conway, CEO of Optum Rx, said: “The 5,000 customers who hired us – including employers, unions, health plans and governments – rely on Optum Rx to counterbalance drug manufacturers’ high and rising list prices. . Our negotiated rebates and clinical resources deliver annual average drug savings of more than $2,000 per person. And a recent analysis found that PBMs save the broader healthcare system approximately $145 billion annually.”
David Joyner, who was president of CVS Caremark at the time of his testimony (and months later was named CEO of CVS Health), said: “From 2017 to 2022, our proven tools and strategies have reduced the net cost of branded medicines by 15%. Despite these successes, branded products with little or no competition remain the leading source of rising drug costs, fueled by their high list prices.”
Regardless of who is responsible for the high prices, patients like Caillouet are forced to make difficult choices.
“I just have to pack my wallet and do less shopping,” he said. “If that’s what you have to do, then that’s what you have to do.”
Fox 8 reached out to CVS Caremark, Express Scripts and Optum Rx for comment but did not receive a response.
According to the National Community Pharmacists Association, which represents more than 19,000 U.S. pharmacies, 300 independent pharmacies will close by 2023. According to a survey conducted by the NCPA in 2024, nearly a third of independent pharmacy owners have closed due to declining reimbursement from plans and PBMs. .
Several states have passed laws to rein in PPE. A bill was introduced in Congress last year that would prohibit PBMs from arbitrarily increasing or decreasing reimbursements, but the bill has yet to be submitted to the full Senate or House of Representatives for a vote.
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