Legislation Aimed At Reducing Cost Of Drugs Charged By Middle Men

TAMPA, FL — Fellow lawmakers, patients, physicians, pharmacists and small business owners joined state Rep. Jackie Toledo Tuesday as she announced plans to sponsor legislation that would increase Floridians’ access to prescription drugs while lowering costs.

The legislation directly addresses predatory practices by Pharmacy Benefit Managers that side-step free-market principles and force patients to use pharmacies owned by those PBMs – even if the costs are higher, said the Republican from Tampa.

“Our priority is advocating for Floridians who have felt the pinch in their wallets because profit-driven policies by PBMs are robbing patients of savings that should rightly be theirs,” said Toledo. “Consumers need to know that their state lawmakers are fighting for their best interests, and our legislation will help put the power back where it belongs: with the patient.”

PBMs are secretive prescription drug middlemen in a complex drug marketplace. Originally established to facilitate claims processing, they’ve become more powerful in the healthcare marketplace and now use a convoluted process to reap untold hundreds of millions of dollars when consumers buy their prescription drugs, said Toledo.

PBMs negotiate in secret to determine which medications will be covered by insurance plans and, in exchange, receive significant pricing discounts – which the PBMs then largely pocket for themselves while patients and plans see increased costs.

“PBMs aren’t medical doctors, and they shouldn’t be making medical decisions. Yet time and again we see them deny, delay or obstruct the treatment plans that have been carefully considered and approved by patients and their physicians,” said Dr. Brandon Konkel, an oncologist with the Florida Cancer Specialists in Tampa. “PBM profits should not come before the patients. That’s why it’s essential for Florida to join the growing number of states that are pushing to reform this broken system.”

House Bill 961, co-sponsored by Rep. Randy Fine, a Republican from Palm Bay, addresses a number of PBM-related practices:

• Spread Pricing - The difference between what the PBM charges a health plan and how much it reimburses the pharmacy
• Self Dealing - PBMs paying their own pharmacies more per prescription than other network pharmacies and steering patients to the pharmacies they own
• Cost Share - PBMs collecting rebates offered by pharmaceutical companies but then failing to pass the savings on to patients
• Transparency - Requiring that all information, including revenue made by PBMs, be reported to the state or other plan sponsors
• Bad Business Practices - Protecting patient access to medications by keeping neighborhood pharmacies from being pushed out of business and eliminating anti-competitive practices

“PBMs don’t prescribe drugs, they don’t manufacture drugs and they don’t dispense drugs, but somehow they have figured out how to make billions of dollars off the drug marketplace at the expense of patients,” said Loretta Boesing. “As a caregiver and patient, I think it’s about time we start getting the benefits we’re entitled to without having to navigate the complex hurdles that PBMs require everyone to jump through.”

The legislation has the support of numerous pharmacy, patient and physician health care groups, including the Small Business Pharmacies Aligned for Reform.

“When pharmaceutical middlemen also own a dominant retail partner, inherent conflicts of interests arise that can lead to reduced competition, and increased prices,” said Fine. “Those increased prices not only hit consumers through both higher drug and insurance prices but also taxpayers through more expensive Medicare and Medicaid programs. When you think about it, the distribution of drugs is a commodity business, and government should be doing everything possible to reduce transactions costs to create the most efficient, low-cost drug prices possible. I am proud to work with Representative Toledo to fight for our constituents and taxpayers on this critical issue.”

Toledo said the top three PBMs control approximately 85 percent of the market, with those companies owning their own mail order, specialty and retail pharmacies. The result is that these PBMs often use a process called “steering” to direct patients to those pharmacies that will generate the greatest profit for themselves.

These anti-competitive processes have reduced consumer choice and had a devastating effect on neighborhood pharmacies across the state, she said. Over the past three years, the number of independent pharmacies in Florida has fallen by 15 percent and continues to drop.

“Neighborhood pharmacies like mine do so much more than just dispense medications. We know our patients and can offer guidance, work out flexible payment terms, even make deliveries when our patients aren’t able to leave their homes,” said Alex Herwig, a pharmacist and owner of Gulf Coast Apothecary. “PBMs are actively working to drive us out of business to benefit their big-box partners, and this leaves patients with fewer choices to help meet their medical needs.”

At least 33 states have taken action to reform the PBM industry by addressing copay “clawbacks” that generate higher after-the-fact payments for PBMs; reining in the practice of spread pricing, requiring PBMs to act as a fiduciary on behalf of patients; and ensuring that audits aren’t used to punish pharmacies.

In 2018, Florida lawmakers passed legislation prohibiting PBMs from including “gag orders” in contracts that restrict pharmacists from informing patients about lower-cost alternatives.

“This issue may be complex, but the solution is not. We need to put patients back in the driver’s seat, so they can benefit from lower costs and improved access to prescription drugs,” Toledo said.