A groundbreaking new study sheds light on how a mysterious middleman in the RX industry is affecting patients and local pharmacies.
RENTON, Wash. – Many frustrated pharmacists in Washington are feeling validated this week after a new analysis was released suggesting the industry’s third-party drug negotiators are destroying employer health care plans and strangling local pharmacies.
Brick and mortar pharmacies in Washington are struggling. According to the Washington State Pharmacy Association, 83 community pharmacies are set to close in Washington by 2023.
Its CEO, Dr. Jenny Arnold, said: “It’s bad for patients. It’s bad for employers, it’s bad for healthcare providers.”
Her association is now armed with new information. A first-of-its-kind study she commissioned through 3 Axis Advisors confirms what many pharmacists suspected all along: that most mail-order pharmacies are putting local ones out of business.
“This study confirms what pharmacies have been telling me for years,” said Arnold.
People with health care coverage have what’s called a “pharmacy benefit manager,” or PBM. Examples include Cigna’s ExpressScripts, UnitedHealth’s Optum RX, or CVS Health’s CVS Caremark.
Historically, PBMs played a vital role in negotiating claims between a pharmacy and an insurance company. But now, new research shows that in many cases, PBMs are negotiating inflated prices for drugs and directing patients to affiliated mail-order pharmacies instead of local ones.
According to the report, drug prescriptions of mail-order drugs associated with PBMs are more than triple prescriptions at local brick-and-mortar pharmacies.
The report also found that while Washington employers’ plan costs increased by 30%, pharmacy reimbursement actually decreased. It is the PBMs who are picking up the difference.
“The prices are sky high,” Arnold said. “Employers are getting undone by pharmacy benefit managers.”
Arnold said PBMs need more oversight and regulation because they are becoming too powerful and often avoid transparency.
“Really owning the health carriers, owning the pharmacies, owning the mail-order pharmacies, now owning the clinics and this huge amount of vertical integration,” Arnold said. “We need a comprehensive reform in this space.
KING 5 asked, “Why hasn’t there ever been a study like this?”
Arnold replied, “Because it’s hard to get this data from employers.”
Arnold said the PBMs’ major influence on the industry is leading to anti-competitive behavior.
She said one example of these behaviors are calls patients receive from PBMs seeking to sign them up for a mail-order prescription from out-of-state pharmacies.
“We hope that the results of this study will lead to investigations by the Department of Justice,” Arnold said.
While mail order pharmacies affiliated with PBMs may claim to keep your drug costs down, new research suggests otherwise.
“We will work to educate employers,” she said. “I would say you should ask your health benefits broker more questions: ‘What kind of pharmacy benefit manager are they working with?’
Two summers ago, Attorney General Bob Ferguson found that the PBM for health care giant Centene illegally overcharged Washington Medicaid. They were ordered to pay $19 million, which is among the largest Medicaid fraud recovery payments in Washington history.
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