Oregon is revisiting its 2013 regulations on pharmacy benefit managers and may be adding more teeth after pharmacists testified that their businesses are still in trouble from PBMs unwilling to abide by the spirit and the letter of Oregon law.
“We don’t feel that [the law] had as much of an enforcement provision as we would like to see,” said Niki Terzieff, a lobbyist for the Oregon State Pharmacy Association.
Terzieff said that some PBMs were failing even at the simplest of transparency rules -- providing pharmacists with a direct telephone number for filing appeals when they disagree with the PBM.
House Bill 2875, if passed with an amendment from the Oregon State Pharmacy Association, would give regulators at the Insurance Division the ability to fine PBMs that are not acting according to the law. The pharmacists also want the right to refuse to dispense medications when they face a monetary loss from the PBM’s volatile and capricious pricing scheme.
Pharmacy benefit managers, or PBMs, are companies that act as middlemen between health insurance companies and pharmacists. Their representatives claim they have helped to drive down the cost of generic drugs, but they show little proof that they have been responsible for such savings, and they earn a hefty profit in the process.
There are 34 PBMs registered in Oregon, but just two of them -- Express Scripts and CVS Caremark -- account for the lion’s share of drug management for people with insurance. Express Scripts alone has netted as much as $1.8 billion in profit in 2013.
Health insurers, rather than purchase their drugs directly from pharmacies, pay these third-party companies that specialize in prescription drug management to negotiate with pharmacists. Most PBMs pay pharmacists for their drugs based on a mysterious formula that generally averages the wholesale cost of generic drugs from competing manufacturers.
Pharmacists make money dispensing some drugs and lose money on others, based on the spread between the wholesale price and the PBM formula for determining the average commodities price. The PBMs make their profit similar to a bookie, taking a cut regardless of the swings of the market. More transparent PBMs charge a fixed fee rather than benefiting from a secret spread, which is hidden from both pharmacists and health insurers.
Drug prices can change wildly from one moment to the next. The 2013 law required PBMs to post a price at least once weekly, but the pharmacist lobby complains that some PBMs are not providing any real way for them to check price updates.
Pharmacists are also bound to dispense a medication regardless of what they can get paid, creating situations where they might only be reimbursed $200 for a drug that cost them $800 if the PBM decides that’s all its formula will pay, according to Anne Murray of Murray’s Drugs in Heppner, a remote outpost in Eastern Oregon.
Rep. Mitch Greenlick, D-Portland, took umbrage with Express Scripts’ Cindy Laubacher when she defended this practice by arguing that pharmacists make money even if her company and other PBMs refuse to guarantee them a profit on all drugs.
“You don’t want to pay them the cost of the drugs. You also don’t want them to be allowed to cancel the prescriptions,” Greenlick inquired. “We’re certainly not going to allow that.”
Pharmacy lobbyist Bill Cross told The Lund Report that giving pharmacists the power to refuse to dispense at a loss would likely force PBMs to pay them fairly since the companies want to avoid consumer complaints. Pharmacists’ leverage with PBMs might still be slight since they count on PBMs for almost all of their business.
CVS lobbyist Jonathan Eames argued against the legislative fix, noting that the full implications of the law only took effect Jan. 1, and the new regulations needed time to work. CVS needs pharmacists to serve all customers,he said, and rural pharmacies are especially important and paid more to dispense medications than urban pharmacies.
Pharmacist Michele Belcher of Grants Pass Pharmacy conceded in her testimony that CVS was ahead of other PBMs and provided pharmacies with a real-time portal for pharmacists to check prices. But a real-time portal does not exist for other PBMs, and some companies are not providing any simple way for pharmacists to determine how much they’ll be paid, even once a week, as required by the law.
At our practice, we are now constantly hassled by pre-authorizations for "generic" medications. Ridiculous! What control do physicians have over generics? If a PBM can't manage generics, they are "by definition" unable to carry out their primary function.
Nick Benton