Beyond the Bench: How the Pharmacy Benefit Manager Transparency Act of 2022 Will Impact Pharmacies
As an independent pharmacy owner and pharmacist, the last 5-7 years have felt like a runaway train when it comes to prescription reimbursements, take it or leave it contracts, exponentially increasing DIR fees and audits from Pharmacy Benefit Managers (PBMs).
Pharmacy Benefit Managers (PBMs) are third-party intermediaries that negotiate drug benefits on the behalf of health insurance companies, employers, and government programs. The concept behind PBMs was to help manage formularies and control costs. However, over the past 15 years a few PBMs have grown exponentially through acquisitions, vertical integrations with insurers and in-house mail-order pharmacy and specialty pharmacy arrangements. The scale of consolidation has been so significant that the three largest PBMs control over 80 percent of the United States’ prescription drug market. As in any industry, when only a few players control a disproportionate share of the market the concern regarding monopolistic practices starts to grow. It seems that these few large PBMs have grown large enough that the United States political and regulatory machine have finally started to take notice.
Unfortunately, community pharmacies (both independent and chain drugstores) have been noticing the negative impact of these large PBM’s for the better part of a decade. Community pharmacies are particularly concerned by PBM practices because in most cases, much of their revenue is controlled by these organizations. Pharmacies have been waving the flag on questionable PBM practices for the better part of a decade. Most of the complaints surround issues regarding patient steering (PBMs forcing patients to use their own in-house pharmacy, thereby removing patient choice), underwater reimbursements (pharmacies being paid by PBMs at rates lower than they can purchase the medications for at wholesale levels), unpredictable fees and clawbacks, and non-negotiable contract terms that make sustainable business impossible for the pharmacies.
However, the last several months have been very exciting from a political and legislative reform perspective in the pharmacy world. Not only did The Federal Trade Commission launch an inquiry into vertically integrated PBMs, but we also have seen the introduction of a bipartisan bill, the Pharmacy Benefit Manger (PBM) Transparency Act of 2022 by Senators Maria Cantwell (D-WA) and Chuck Grassley (R-IA). This has come after the passing of a wave of state regulations on PBMs over the past few years.
The Pharmacy Benefit Manager Transparency Act of 2022 is particularly interesting as I believe it covers most of the concerns that pharmacy owners/operators have regarding PBMs. It appears that Senators Cantwell and Grassley truly understand the issues and danger that a lack in regulation and oversight can pose to the healthcare system. The bill is still in the early part of the legislative life cycle, but it is a very encouraging start.
The Act Specifically:
- Prohibits arbitrary, unfair, or deceptive practices
- Incentivizes fair and transparent PBM practices
- Improves transparency and competition
- Enhances enforcement
Impact on Pharmacies
- Improved revenue streams with fair reimbursements
- Supports community pharmacies to allow them to continue to serve many local and underserved rural and urban areas and increase access to care
A Brighter Future: Improved Accessibility and Affordability
- Decreases healthcare costs (insurance plans, drug prices, etc.)
- Improves competition of drug pricing to drive down costs for consumers
- Protects the most vulnerable patients, such as those battling cancer, from delayed or denied medications
- Improves where and when consumers can purchase prescription drugs (retail, specialty, mail-order)
Although the final bill may look very different than it does today, I am greatly encouraged that this bill in its current form has been proposed. Political, regulatory and legislative attention on PBMs is exactly what community pharmacy needs to survive into the future. If it does eventually pass, it certainly won’t change the current market in community pharmacy overnight. However, this is forward progress and can hopefully help community pharmacies to continue to provide essential healthcare services around the country. While this proposed legislation is certainly exciting, we can’t rest on our laurels. Community pharmacy professionals must continue to advocate and actively participate in state and federal organizations. We must also seek to diversify our businesses away from being solely dependent on PBM based revenue streams. Clinical services such as point of care testing, expanded vaccine programs, and more will be just as essential to survival as legislation.
In this ‘Beyond the Bench’ blog series, we will hear from thought-leaders on ways to take pharmacy practice to the next level. In the first post, Matthew Yeates discussed 3 ways Pharmacists Can Expand Their Roles. One opportunity he mentioned was to support legislation that support Pharmacies and their expanded roles. Chris Schaffner dove further into that topic today. Don’t forget to revisit Matthew’s post as you think about elevating your own practice.