Pharmacy

Pharmacy Benefits Managers: The Need for Reform

Despite their essential role, supermarket pharmacies are struggling to stay in business due to the anticompetitive practices of pharmacy benefit managers (PBMs). PBMs are for-profit companies that manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers, and other payers.

PBMs’ practices often lead to patients paying more for prescription medications and supermarket pharmacies having to close their doors. Some supermarkets have had to sell their pharmacies while others have had to shutter, resulting in 2,200 pharmacies closing in 2019 alone and leading to significantly reduced access for consumers. Following are a few of the many anticompetitive practices that need to be reformed:

• Direct and Indirect Remuneration (DIR) Fees: Pharmacies dispense medications and are reimbursed by their patients’ health care plans, only to have a portion of that reimbursement clawed back by PBMs weeks or even months after the transaction. Because pharmacy DIR fees are unpredictable and typically unrelated to a pharmacy's performance, it’s impossible for pharmacies to anticipate these fees. According to the federal government, pharmacy DIR fees have grown by 91,500% between 2010 and 2019.
• Spread Pricing: PBMs reimburse pharmacies less on claims for prescription drugs than what the PBMs charge health plans; PBMs then pocket that “spread” as a source of revenue.
• Audits & “Quality Measures”: PBMs frequently force pharmacies to undergo expensive and time-consuming audits to make sure that they are meeting contractual requirements set by the PBMs. They then penalize pharmacies based on these uncontrollable “quality measures.”