Florida Gov. Ron DeSantis introduced legislation to “rein in” the unchecked pharmacy benefit managers and bring more transparency and lower drug prices.
Big Pharma like Pfizer, GlaxoSmithKline, Bristol Myers Squibb, AstraZeneca, and Sanofi raised prices on 350 prescription drugs on January 1 as more Americans live paycheck-to-paycheck, and inflation is still a thing.
Consumers have options to get prescription drugs at a lower price, but the pharmaceutical companies have increased their attacks on the government 340b program.
Under 340b, drug manufacturers agree to discount drugs to safety-net providers in exchange for their drugs being covered by Medicare and Medicaid.
Until recently, insurance companies and pharmacy benefit managers [PBM] reimbursed the retail price, and the health centers were able to pocket the difference with the mandate they use the money to reach more eligible patients and provide more comprehensive services.
But if you take prescription meds, they’re the ones who usually control which ones you have access to.
“It’s most of the business, it really is. Almost every single claim or every single prescription you dispense has to go through a PBM,” said Dr. Anthony Maldonado, a Sanford pharmacist.
Maldonado says it’s often the case a patient needs a certain kind of medicine, but he can’t provide it because it’s not on the PBM’s list of approved drugs, which is called a formulary.
“There are circumstances where a physician prescribes a medication for a patient and it’s not on the formulary. So there is a process which tends to delay for that patient to get therapy, and again it’s not on the formulary. The PBM’s determine what’s in and what’s not,” he said.
At least 22 states have laws against PBMs working around 340b:
Colleen Meiman, a national policy adviser for state associations of Community Health Centers, said in recent years, the benefit managers have changed their approach. “What has happened in the past five to 10 years or so is that the PBMs have figured out, ‘Wait a second, you’re a health center. You’re eligible for 340b, we know you’re paying less for drugs than everybody else, so we’re going to reimburse you less for drugs,’ ” Meiman explained.
Meiman pointed out 22 states have passed laws against 340b workarounds. A bill to make these practices illegal died in committee in the Missouri Legislature last term.
Meiman noted for decades, the financial stability of Community Health Centers has relied in part on 340b savings, and pharmacy benefit managers are exploiting a loophole. “Just because you just recently figured out that there’s this loophole in the law, and you can get your hands on our savings, does not negate the fact that those savings are critical to keeping the primary-care infrastructure safety net in this country running,” Meiman contended. She added over time, the benefit managers’ tactics have evolved to avoid providing 340b drug access in the first place. “You’ll see ‘Oh you dispense 340b drugs, pharmacy? We’re not going to let you into our preferred network,’ is a favorite approach,” Meiman stressed. “‘We’re not going to cover 340b drugs anymore’, so there are many different ways of instead of just paying them less, just keep the patients from getting the 340b drug in the first place.”
The Biden administration’s Inflation Reduction Act will allow the medicare program “to negotiate prices directly for some drugs starting in 2026.”
The Democrats want the IRA, while the Republicans push back. However, the Republicans complained the IRA doesn’t address PMBs. They consider the PBMs “and the rebates and fees they collect from drug manufacturers and pharmacies” the main “cause of high drug costs”:
Independent pharmacies say PBMs’ recent integration with retail pharmacies and health plans has steered patients away from their businesses, while drug manufacturers argue that having to pay PBMs rebates and discounts results in higher initial list prices.
The Pharmaceutical Care Management Association, the leading PBM trade group, says they haven’t limited the healthy growth of the independent pharmacy marketplace, and that PBMs work to deliver discounts to patients.
Lawmakers, especially Republicans, have proposed legislation that could resurface in the new Congress. A bill (S. 4293) from Sen. Chuck Grassley (R-Iowa) would prohibit PBMs from practicing spread pricing, or charging health plans more for a drug than they reimburse to pharmacies. It would also require PBMs to pass 100% of rebates to health plans, and authorize the Federal Trade Commission and state attorneys general to seek civil penalties for violations of FTC mandates.
PBMs are a top priority for [House Energy and Commerce Committee Chairwoman Cathy] McMorris Rodgers in the new Congress, specifically investigating if “PBMs are keeping lower cost drugs off formularies in favor of higher rebated brand drugs.”
States are moving quicker than the federal government to take action against the PBMs who try to work around the government’s 340b program. After all, the negotiations in the IRA won’t start until 2026.
Florida and North Dakota began taking steps this year.
The proposal also increases the registration requirements of PBMs to ensure a more comprehensive evaluation is conducted prior to doing business here in Florida. Today, PBMs pay a mere five dollar registration fee, disclose limited details about themselves to the state and are subject to little to no accountability. The legislative proposal takes the following steps for accountability:
- Requires PBMs to disclose all organizations affiliated with the applicant, including any affiliated pharmacies or companies within their corporate umbrella.
- Requires PBMs to disclose any complaints or settlement agreements they’ve been party to prior to operating in Florida.
- Directs the Office of Insurance Regulation to take action against PBMs which violate state law and hold them accountable, as is consistent with all insurers.
Governor DeSantis is also holding manufacturers accountable by:
- Proposing a public disclosure requirement of all proposed drug price increases.
- Requiring all manufacturers to submit an annual report outlining and justifying any increases over the past year.
To sum it up, DeSantis wants Florida “to regulate spread pricing, steering, and prohibiting reimbursement clawback.” The legislation will also prevent PBMs “from pushing consumers and patients toward specific drugs or mail-in pharmacies, keeping them from shopping around and finding a different place ‘best for you.'”
Has anyone had that problem? I remember in Texas, I would get punished if I didn’t use the mail-in pharmacy for my long-term prescriptions. Another one offered big discounts to use CVS even though Walgreens always had Adderall in stock. I can only fill Adderall when I have two pills left, which puts me in a bind.
DeSantis has been ahead in tackling high drug prices. Florida sent its Canadian Drug Importation Program to the federal government 800 days ago, but the FDA has not acted. The program would “import cheaper prescription drugs from Canada for government programs such as Medicaid, prisons and facilities run by the Department of Children and families.”
DeSantis and Florida sued the FDA for dragging its feet. Florida is home to the most retirees in America:
“We’d start with using state programs, it’d save us tens of millions of dollars, probably over a hundred million dollars” DeSantis said. “But we’ve got to get to a point where our consumers, in America, are treated equitably, because we pay so much more than other countries.”
The governor said Florida was fighting in court to succeed, and accused the FDA of fighting in court to defend pharmaceutical companies.
“We understand that we can’t put all of our eggs in one basket. You have a lot of issues. If you look at Bidenflation,” DeSantis said. “From July 2021 to July 2022, the average price increase for prescription drugs, 31.6% increase. The inflation is bad enough as it is, and that’s even above the general inflation rate.”
North Dakota proposed something similar to DeSantis’s Canadian program:
Under the five-page proposal, PERS would be charged with identifying the 25 costliest prescription medications for its members.
Then, the state insurance commissioner would reference the prices for the same drugs in four Canadian provinces to set caps on what local pharmacies and health insurance firms can pay pharmaceutical companies for the medications.
In theory, limiting the amount of money pharmacies and insurers are allowed to pay for medications would result in savings for PERS and its members.
The bill would also create penalties, including hefty fines, for drug manufacturers that pull their products out of the North Dakota market to avoid the impact of the price-limiting program.
Multi-billionaire Mark Cuban, the owner of the Dallas Mavericks and Shark Tank panelist, developed the Mark Cuban Cost Plus Drug Company:
Cost Plus deals directly with manufacturers and consumers, offering more profits for those who make drugs, and lower prices for those who take them. His prescription for pricing = the drug’s cost, plus 15% for Cost Plus, plus a $3 pharmacy fee, plus $5 shipping.
Cost Plus offers 1,100 medications right now, mostly, but not all, generics, like atorvastatin (the generic of the cholesterol drug Lipitor), whose retail price is $55.08 for 30 pills. Cost Plus? $3.60 for the same amount.
Cost Plus Drug recently partnered with RxPreferred Benefit and EmsanaRX giving those customers an opportunity to use Cuban’s pharmacy.
Cuban aims to add low-cost insulin to the pharmacy:
“It may be a month, it may be six months, it may be two years,” said Cuban, referring to when his business, the Mark Cuban Cost Plus Drug Co., could begin offering insulin directly to consumers.
The diabetes medicine would join a list of about 350 generic drugs that the online prescription drug company now offers at discounted prices. In almost a year since its launch, Cuban said, it has attracted nearly 1.5 million customers.
Adding insulin to the company’s offerings will be an expensive endeavor. The business has already spent $5 million just to go through the initial phases of selling the medication, Cuban said, and even considered spending another $150 million to $250 million to create a manufacturing plant.
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