There is rising concern that consolidation in the health care industry is shifting power away from patients and physicians toward large intermediaries. An example of this is the role of pharmacy benefit managers, or PBMs, which negotiate prescription drug prices for insurance companies and determine what medications will be available to patients under various plans. Anne Cassity argues that PBMs have moved beyond their original role and now create conflicts of interest that raise costs and threaten the survival of local pharmacies.
Cassity, an executive at the National Community Pharmacists Association, says community pharmacies are unique in American health care. They are “the most accessible health care providers out there,” she says. Most independent pharmacies know their customers personally, understand family and medical histories, and provide the time and trust that many patients need.
That role, she says, is increasingly under threat from consolidation. Cassidy argues that consolidation in health care has failed to deliver promised benefits. “It’s not leading to greater access, lower prices, or more efficient care,” she says.
She explains that PBMs originally helped process claims electronically for insurers. “That was a good thing,” she says. Over time, however, PBMs became vertically integrated with insurers, pharmacies, and other entities. “They now have a chokehold on the whole drug supply chain,” she says.
Concentration of power allows PBMs to exert more control over which drugs appear on formularies, which pharmacies patients can use, and how much pharmacies are reimbursed. Cassity says rebates play a central role in distorting incentives. She says that additional intermediaries obscure rebate totals, leaving plan sponsors unaware of real costs.
Those incentives, she says, directly affect patient care. Cassity describes situations where lower-cost drugs are excluded in favor of higher-priced alternatives that generate larger rebates. “There may be a $10,000 drug out there and an $800 drug out there, and they do the exact same thing,” she says. “The $10,000 drug will be the drug that’s on the formulary.”
The system also interferes with clinical decision-making by “getting between a doctor and the patient,” she says.
The system is putting community pharmacies at risk. PBMs are able to influence reimbursement rates while owning competing pharmacies. “They’ll agree to reimburse pharmacies below the cost the pharmacy acquired the drug,” she says. She explains that pharmacies cannot mark up prescriptions and often receive only pennies to dispense medications. “They do not control at all what we get paid,” she says.
Cassity points to extreme examples of dysfunction. “There has been times where the cash price of the prescription would be less than the customer’s co-pay,” she says. She explains that pharmacists were once prohibited from telling patients about cheaper options until Congress passed the “gag clause” law. “We literally had to get an act of Congress,” she says.
Cassity sees momentum for reform. “This may be the one bipartisan issue in Washington, DC,” she says. “It’s sitting out there, it’s ready to go,” she says, pointing to reintroduced legislation with broad bipartisan support.
