CUYAHOGA FALLS, Ohio — Barry Klein owns Klein’s Pharmacy in Cuyahoga Falls, and has a machine that fills prescription containers. He said it costs $300,000.

What You Need To Know

  • Pharmacy Benefit Managers, or PBMs, are third parties working for health insurers that negotiate drug costs

  • The Ohio Pharmacists Association says PBMs often “claw back” chunks of prescription drug sales

  • The Pharmaceutical Care Management Association, or PCMA, says that PBM contracts with pharmacies help prevent drug cost fluctuations

“We produce about 80 patients a day out of this machine," Klein said. 

He’s glad he has already bought it because he wouldn’t be able to afford it with the profit margins he has now. 

Klein said a third party, called Pharmacy Benefit Managers, or PBMs, has been eating into his bottom line. PBMs are third-party administrators hired by insurance providers to help lower prescription drug costs. He has to give the PBM a percentage of each sale, which is something he calls a claw back. He showed Spectrum News how much he said he lost on a single prescription sale. 

“They took away 42.7 percent of that 14 months later. So our net gross profit after claw backs was $6.53," he said. "That’s unsustainable to try to keep the business open."

The Ohio Pharmacists Association said PBMs may be why some independent pharmacies in Ohio are closing. They estimate that the number of independent pharmacies in the state has dropped from 1,200 to 500 since 1988. 

The Pharmaceutical Care Management Association, or PCMA, represents PBMs across the country and said they help reduce the cost of insurance premiums for benefits.

The PCMA said in a statement that, "PBMs typically adjust overall pharmacy reimbursement to the agreed-on amount in the contract. The adjustments occur on the agreed upon contractual timeframe."

Meanwhile, Klein is working in both the front and the back of his pharmacy to keep it running. 

Klein said that it’s hard to plan around the claw backs, since he won’t know when he will be billed. He said he has eight weeks to pay off an invoice. 

“It creates a lot of uncertainty because we don’t know what that claw back amount is going to be," Klein said. 

State Rep. Thomas West helped write legislation aimed at eliminating claw backs in 2017. He says those initial claw backs primarily hurt the patients paying for the prescriptions. He said the claw backs have changed since then, and are now affecting pharmacies. 

“Now, they’re working on a different type of claw back whereby they overpay the pharmacy for the price of the drug and months and even years later they claw back the difference," West said. 

The PCMA said that pharmacy and PBM contracts protect against significant generic drug price fluctuations, which can increase drug costs for patients. 

West said the state has passed a law creating a single PBM for the state's Medicaid program, which will be regulated by the state. He said more reforms are necessary for private insurance companies, and he believes that has to start with changing what is and isn't allowed in a PBM contract. 

The Pharmacists Association says PBMs work on behalf of insurance providers, and if a pharmacy doesn’t contract with them, patients might not be able to use their private insurance or Medicaid at that pharmacy, causing them to pay out of pocket for their medicine. 

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