As state lawmakers sought to hear explanations about rising prescription drug costs for patients and pharmacies, a heated debate unfolded Wednesday between pharmacists, lawmakers and the middlemen who set the procurement and sales prices of drugs sold to patients.
The problem? If nothing is done, patients could face increasingly expensive drugs or longer drives to in-network pharmacies. At a House Prescription Drug Policy Task Force meeting, lawmakers and state officials said the current situation could leave Mississippi without stronger legal protections.
“We have a lot of people who don’t have the gas money to drive 25 miles to get their medications filled,” said Chairwoman Beth Waldo, a Pontotoc Republican. “In many cases, it’s a life-and-death situation. They absolutely need the medication.”
Pharmacists say the crux of the problem is a lack of transparency between what intermediaries negotiate with employers and drug companies and what they negotiate with pharmacies over prices and terms.
These intermediaries are pharmacy benefit managers, and their representatives during the meeting denied allegations that they are unfair to independent pharmacies, that they inflate drug prices, favor their own pharmacies, and do not negotiate drug procurement or pricing terms with local pharmacies.
They pushed the problem onto pharmacy service management organizations, which negotiate with pharmacy benefit managers on behalf of pharmacies, drug companies that set initial prices for drugs before they hit the market, and employers, who pay pharmacy benefit managers to negotiate with pharmacies at certain prices.
“It’s not in our interest to put these people out of business,” said Tony Grillo, vice president of financial analysis at Express Scripts, the largest pharmacy benefit manager in the U.S. “It’s a critically important relationship. The unfortunate part of the relationship is our role. The reason plan sponsors hire us is to negotiate the best price for them.”
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Pharmacy benefit managers also want more transparency in their negotiations with pharmacies, said Michael Power, president of the Pharmaceutical Care Management Association. Power also said there are several factors that explain why prices vary from pharmacy to pharmacy.
Several lawmakers said the explanation was insufficient.
“I’ve seen cases where independent pharmacists or my own family pharmacist would not fill my prescription because the cost of the drug was higher than what I was willing to pay,” said Rep. Stacey Hobgood-Wilkes, a Republican from Picayune.
What is a PBM and what are the other issues?
Pharmacy benefit managers (PBMs) act as middlemen between insurance companies, employers who pay for employee health plans, and pharmacies (who pay an intermediary fee), and they control which pharmaceutical companies’ products are included on the approved product list within the plan sponsor’s employee health plan network.
The three largest PBMs in the U.S. are CVS/Caremark, ExpressScripts, and OptumRx. Typically, these PBMs make their profits by obtaining approval fees and discounts from drug manufacturers, and they also pay pharmacies less than they charge employers and insurers. PBMs can also collect rebates from pharmacies that violate the terms of their contracts.
Earlier this year, the Federal Trade Commission released a report detailing how PBMs have incentives to work with affiliated pharmacies over others, leaving local companies with less power to negotiate drug prices, reimbursement terms and interest rates.
Holly Springs pharmacy owner Bob Lomenick said one of the biggest problems he’s faced is not having a seat at the negotiating table with businesses.
“They put a contract on us that says, ‘Accept it or reject it,'” Lomenick says. “If they receive 90 percent of the prescriptions and send me a contract that I don’t accept, that means a lot of patients can’t come into my pharmacy. I’ve been in pharmacy for over 40 years and I’ve never been able to negotiate a contract (with a PBM).”
What solutions are currently being considered?
Wald said a bill to address PBMs in the 2024 session died after interest groups representing companies in the banking industry lobbied against it, concerned the bill would raise the costs of doing business.
In addition to pharmacists calling for more transparency, Mississippi Board of Pharmacy officials have called for tougher state laws regulating PBMs, including more equitable penalties for violations and ways for the board to pursue violators.
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“They’re just plugging holes here and there to make it more likely to withstand a legal challenge,” said Todd Dear, vice president of the Mississippi Board of Pharmacists.
Wald said the committee will make a final recommendation about what Congress should do after completing several more hearings later this year.
Grant McLaughlin covers state government for the Clarion-Ledger. He can be reached at gmclaughlin@gannett.com or 972-571-2335.
