Pharmacy benefit managers (PBMs) have a variety of negative impacts on our drug supply chain, and contribute to higher drug prices. But they also have harmful effects on other actors as well. A local newspaper in Maryland recently reported on Surinder Singal, who owns an independent pharmacy and fighting for both drug cost transparency and his livelihood because of PBMs.
Mr. Singal owns an independent pharmacy in Deale, Maryland, a small town in Anne Arundel County, and he processes about 500 prescriptions per month, and about half of them are through Medicaid. For over a year, he has been underpaid for the cost of filing prescriptions through Maryland's Medicaid program, and he believes that PBMs are responsible for this. The state government currently contracts with PBMs for providing prescriptions throughout Maryland; the top PBMs in the state are Caremark, which is owned by CVS, and Express Scripts, which is owned by Cigna. The PBMs pay pharmacies through managed care organizations, and the pharmacies also get some direct payments from the state government for their Medicare prescriptions.
And they are hurting his business. Mr. Singal needs $10.49 (the cost it takes to fill a prescription) plus the cost of the drug in order to break even. But PBMs are only paying tiny reimbursements, and they don't tell pharmacists how much they are paying for the drugs. PBMs also frequently use their power to take additional money from pharmacies later, claiming that the pharmacies were overpaid, so pharmacies often don't know what their true operating costs are.
This is a problem outside of Maryland. Just this week CVS bought a twenty store pharmacy chain in northeastern Ohio and closed all but three of the stores. Community pharmacists have pointed out the CVS and other PBMs slash reimbursements for Medicaid patients and utilize their power to crush competition in the retail pharmacy business. Community pharmacies benefit the areas they serve more than chain pharmacies, especially in rural communities where they provide services that chain pharmacies usually don't and have stronger relationships with their patients.
But in Maryland, pharmacies do not have to just grin and bear it. The 2019 Maryland legislative session started yesterday, and Maryland Senate President Mike Miller's chief of staff said "we had a very productive meeting with [Health] Secretary [Robert] Neall to discuss the issues that independent pharmacies are facing, and we look forward to finding a solution to keep these important mainstays of our community.” This year, the state legislature should take action to promote increased drug price transparency and stronger regulation of PBMs. And pharmacies, consumer groups, concerned citizens, and others should mobilize to hold PBMs accountable.