Let’s Unite Against PBMs’ Pennsylvania Monopoly

The healthcare industry’s most covert scheme might finally be unraveling. This week, the New York Times debuted a series of investigative reports on pharmacy benefit managers (PBMs) and their role in overcharging state Medicaid programs, Medicare, and employer-sponsored health plans for specialty prescription drugs. As consumers, especially seniors, struggle to pay for medication in Pennsylvania and across the nation, these findings strike me as particularly egregious.

The hard-hitting expose exposed a commonly used PBM tactic of “steering” highest price, branded drugs to consumers – even when cheaper generic and biosimilar options are available. In a nutshell, PBMs effectively force insurance plans to pay for those higher cost drugs, consequently jacking up prescription costs for consumers while they pocket a pretty profit.

This longstanding practice has been robbing consumers for some time but the blame for the high costs has never managed to be aimed at its rightful provocateur: PBMs.

An example of this injustice is the popular inflammatory disease drug, Humira, which is a huge cash cow for these opportunist PBM “middlemen.” Humira, for instance, carries a list/retail price of over $6,500 compared with the approved biosimilar alternatives, which carries a list price closer to $1000. PBMs make money from fees charged to the drug-maker as a percentage based on the retail price of the drug. The math is simple. Every filled script of Humira makes the PBM X percent of $6500, which is more than X percent of $1000. With millions of Americans being treated with Humira, it’s easy to see the PBM industry’s motive to stick health plans and consumers with the highest price drug. To make matters worse, patient co-pays are calculated as a percentage of retail price and these large PBMs steer patients to their owned pharmacies to control which drugs are dispensed, threatening the livelihood of Pennsylvania’s community pharmacies.

Three dominant PBMs—CVS Caremark, OptumRX, Express Scripts—are owned by three of the largest healthcare conglomerates in the country—Aetna, United Healthcare, Cigna—that have cornered over 80% of the prescription drug pharmacy benefit market. This environment has bred greed, and that greed has led to patients being deprived of critical care. This monopolistic practice has long been hidden. But not anymore.

Thanks to the New York Times and numerous studies that have been released based on real pharmaceutical claims data, we now know better. Pennsylvania is moving forward with legislation to restore market forces by rebalancing the leverage of middlemen in the pharmaceutical industry, and thus rescuing patients from predatory price gouging. Senate Bill 1000, introduced by state Sen. Judy Ward, and HB 1993, introduced by state Sen. Jessica Benham (I’m a co-sponsor and strong advocate), are primed for consideration in either chamber. Moreover, Gov. Shapiro has pledged his support for serious PBM reform, even galvanizing his support during his February budget address.

Bipartisan wins are rather rare to come by these days, but they’re not altogether impossible. The PBMs have drawn equal ire from both major parties. We’ve united against the clear manipulation of the marketplace, the simply unaffordable prices that our constituents are forking out to get life-changing treatment, and the monopolistic stranglehold that threatens to crowd out our community pharmacies. I commend the governor and Republican and Democratic members of the Senate and House in Pennsylvania for coming together to reform this long overdue practice. The good news is that it seems the jig is up for PBMs. It would be even better news if we can move on either SB 1000 or HB 1993, for the good of our Commonwealth and the millions of Pennsylvanians overpaying for their prescription drugs.