Floridians should now be able to get more transparency in drug pricing, thanks to recently enacted legislation and an executive order signed by Gov. Ron DeSantis last week.
What You Need To Know
- Pharmacy Benefit Managers (PBMs) act as “middlemen” between the pharmaceutical companies and pharmacies, to purchase drugs at reduced prices or with the promise of additional rebates
- Independent pharmacies say PMBs are squeezing them out of the marketplace
- Florida is one of the latest states to regulate PBMs
The moves target Pharmacy Benefit Managers (PBMs), who work as intermediaries between drug companies and insurance companies. They pool money from contracted pharmacies to gain purchasing power, then negotiate rates and rebates with the pharmaceutical companies.
Their business agreements have raised questions about pricing transparency in recent years, however. That’s what led the Florida Legislature to unanimously approve a bill (HB 357) sponsored by Tampa House Republican Jackie Toledo earlier this year that will subject PBMs to regulations under the Office of Insurance Regulation, ensuring they comply with strict requirements to protect independent pharmacies and patients in need.
John Noriega has worked at his family's pharmacy, Bill’s Prescription Center in Brandon, for more than 41 years. He said the legislation will provide more choices for patients.
“We should have a lot more patients being able to come in to use our store rather than being steered towards network-owned pharmacies,” he said. “In the big scheme of things in health care, people usually go where they get the receive the best service.”
A 2020 Milliman report produced for the Florida Agency for Health Care Administration, which administers Medicaid in Florida, said the agency was charged nearly $90 million in spread costs in the time period studied. Spread pricing is the term to describe when PBMs charge health plans and payers more for a prescription drug than what they reimburse to the pharmacy and pocket the difference.
“That means that if you’re the provider, they’re going to pay you $15 for the prescription, even though it’s going to cost you $25,” Noriega said. “Then they bill the payer $75 or $100. That’s spread there. The PBM keeps that spread.”
DeSantis’ executive order prohibits “spread pricing” for all PBMs, which Noriega said was something people need desperately.
Despite his criticisms, Noriega says that PBMs still fulfill crucial needs. But he believes that the relationship between them and independent pharmacies like his changed for the worse about 15-20 years ago.
“They handle millions of claims throughout the United States,” he said. “They create those networks that help people, but they also don’t allow people to go outside of those networks. I think that’s one issue that really needs to get fixed.”
Toledo says it motivated her to address PBMs after she tried to purchase medication for her daughter and was told by her family doctor that the prescription would cost $25. When she went to her local pharmacy, they informed her that those drugs would actually cost her $480.
She ultimately paid the initial lower price, but learned afterward that it was the PBM which handled the exorbitant price hike.
“It’s meant to lower prescription drug costs, which effect every single one of us,” she said of her bill.
However, some health experts aren’t sure that’s what will happen.
“There’s really not a clear answer on what types of policies will bring down spending,” Elizabeth Seeley with the Harvard T.H. Chan School of Public Health told Kaiser Health News last year.
Toledo is now in a five-person race for the Republican nomination for the open Congressional District 18 seat, where her opponents include Lakeland-based state Sen. Kelli Stargel and former Florida Secretary of State Laurel Lee.
The federal government and members of congress are also cranking up the heat on PBMs.
The Federal Trade Commission is demanding documents from the six largest PBMs, and the agency recently announced a new enforcement policy for PBM rebates and fees that can prohibit competitors from targeting lower-cost drug alternatives.
And the Senate Commerce Committee advanced the Pharmacy Benefit Manager Transparency Act to the full Senate last month. The measure would prohibit PBMs from reducing or clawing back reimbursement payments to pharmacies and charging pharmacies to offset federal reimbursements. It would also prohibit spread pricing.
While the states are increasingly regulating PBMs, the industry scored a major win last month when the U.S. Supreme Court declined to take up a lawsuit debating whether PBMs have a fiduciary duty to lower drug prices.