Our great country was founded on hard work and competition. That sense of grit is the main principle in our free-market economy where consumers have choice, because competition breeds choice, better quality, and better prices for customers.
But not everywhere. Unfortunately, most Americans don’t have that choice when it comes to prescription drugs. The prices of life-saving medications keep going up. According to the AARP, prescription drug prices are rising even faster than inflation. Americans’ spending on medicines jumped 200 percent between 2000 and 2020. It’s time the American people start to question why this is happening.
Folks may not be familiar with Pharmacy Benefit Managers, or PBMs, but they live with the effects of PBMs almost every time they go to fill a prescription and have to dig deep in their wallet to pay for it.
PBMs are essentially middlemen in the prescription drug supply chain. They negotiate with drug manufacturers to secure discounts on medications by adding those medications to insurance plans’ formularies. They contract with pharmacies and insurance plans to process and pay prescription drug claims.
PBMs claim they help patients by negotiating lower prices from drug manufacturers. But the fact is PBMs rarely, if ever, pass those savings on to patients. More often, PBMs use their bargaining power to bring the cost of a drug down but pocket the difference for themselves. The PBMs get richer, while patients get squeezed.
Moreover, PBMs determine which pharmacies will be included in a prescription drug plan’s network and can force smaller pharmacies to accept lower profits for each prescription filled. As one report on Florida’s Medicaid managed care program found, “PBM-affiliated pharmacies are making 18x to 109x more profit over the cost of the drugs than the typical community pharmacy.”
Smaller, independent pharmacies can’t compete with the PBM heavyweights and are often told, “take it or leave it.” If they take the PBM’s offer, they’re forced to operate on incredibly tight profit margins. If they don’t, their patients don’t have access to the drugs. The mom-and-pop pharmacists lose, and the patients lose, but the corporate PBMs win.
We’ve seen this trend nationally. Between 2010 and 2018, the number of independent pharmacies decreased by nearly 1,300, or 6 percent. But where this is particularly concerning is in our rural communities, like those across the state of Alabama.
We’ve got nearly 600 independent community pharmacies across my state, filling more than 32 million prescriptions. More than half of those prescriptions are for Medicare Part D and Medicaid patients. Closing down a competitor pharmacy may be a success for a giant PBM, but it can be devastating to the business owners, their families and employees, even the community itself.
That is especially true for many rural areas, where the local pharmacy is many folks’ only access to health care within a few dozen miles. In Alabama, we’ve lost 14 rural hospitals in the last 10 years, further underscoring local pharmacies’ importance as a vital piece of health care delivery in rural communities.
Coming out of a global pandemic, during which our rural health systems were already over-stretched, we should focus efforts on protecting and bolstering patients’ access to care. Allowing PBMs to run roughshod over mom-and-pop pharmacies cannot continue.
The state of Alabama took a good first step in passing a law earlier this year that would give more oversight and transparency to PBMs’ practices. Among other things, the law prohibits PBMs from requiring the purchase of pharmacist services through a certain mail-order or retail pharmacy. The law also stops PBMs from banning pharmacists informing patients about more affordable alternatives to the drugs the patient is prescribed.
But more transparency of PBMs’ actions is needed. That’s why I’ve cosponsored the Prescription Pricing for the People Act. This bipartisan bill requires the Federal Trade Commission (FTC) to study anticompetitive practices by PBMs within the pharmaceutical supply chain. Since PBMs refuse to show exactly how much of the savings they pass down to independent pharmacies, further study by the FTC will help shine a light on PBMs’ backroom practices. If the PBMs really do pass on savings to consumers as they claim, I’m sure they will welcome the opportunity to show it to the public.
Independent pharmacy owners and the patients they serve deserve better. I firmly believe we can bring back free and fair competition to the health care marketplace that will benefit consumers and providers alike. It’s past time we change the status quo, give independent pharmacies a fair shot, and ensure patients have better access to the life-saving prescription drugs they need.
Senator Tommy Tuberville represents Alabama in the United States Senate and is a member of the Senate Armed Services, Agriculture, Veterans’ Affairs, and HELP Committees.