Pharmacy benefit managers or PBMs revolutionized work at pharmacies in the 1980s, when what were then known as “switchers” served as the middleman to provide real-time insurance verification and customer responsibility.
However, they have evolved significantly since then and today PBMs play a powerful role in determining what patients pay for prescriptions.
Yet in Kansas, their practices are nearly unregulated and cost taxpayers and health plans more.
We’ve all seen our prescription costs go up, and PBMs’ profits tell the story of why.
According to reports shared with the Congressional Budget Office, the three biggest PBMs recorded $27.6 billion in profit in 2022 compared to $6.3 billion in 2012. That is a 438% increase. They also control 80% of the prescription drug market.
It’s time we call this what it is: a monopoly (or an oligopoly, if you want to get technical).
When you pick up a prescription at the pharmacy, what you pay is based on the ingredient and dispensing costs as determined by a PBM.
Your health insurance plan pays a portion, and you pay either a co-pay, coinsurance or a deductible.
But the truth is that PBMs often pay the corporate pharmacies they own more for both ingredients and dispensing than they pay mom-and-pop pharmacies.
At the same time, PBMs are keeping rebates from drug manufacturers that would lower your costs. To top it off, PBMs often bill your insurance far more than what they pay the pharmacy.
I know what you’re thinking: That should be illegal.
Well, the Kansas Legislature has an opportunity to make it illegal with Senate Bill 360, the Kansas Consumer Prescription Protection and Accountability Act. This legislation would require all rebates from drug manufacturers to be passed on to health plans.
This is a no-brainer when it comes to helping reduce out-of-pocket costs and lower insurance premiums.
It would eliminate a practice called “spread pricing,” where a PBM charges a health plan more than it reimbursed a pharmacy.
The law would shine a light on the hidden costs consumers are forced to pay for life-saving medication. It would also ensure that all pharmacies get the same reimbursement for ingredients and dispensing costs.
It would put an end to PBMs’ practices of driving local pharmacies out of business and forcing patients to use mail-order pharmacies.
