CLEVELAND — Antonio Ciaccia is president of 3 Axis Advisors, a drug pricing research and consulting firm. He said initially Pharmacy Benefit Managers, or PBMs, were prohibiting pharmacies from telling patients that it could cost less for a drug if was paid for out of pocket.
Legislation passed in 2017 changed that.
“Understandably, lawmakers were quite upset and in unanimous fashion said that’s not OK and that PBMs should not have licenses to bully their pharmacists into charging more than they would otherwise want to charge that patient,” Ciaccia said.
PBMs are third-party administrators that work with health insurers to negotiate drug costs. Most pharmacies are in a contract with a PBM, and have been criticized for “clawbacks.”
Clawbacks happen when a pharmacy is overpaid for a drug transaction with insurance funds, and the PBM then takes back the difference.
Ciaccia said there are several steps in the supply chain before someone buys a prescription:
- A manufacturer makes the drug
- A wholesaler buys it from the manufacturer
- A retailer or pharmacy sells the drug
- A patient buys the drug
Ciaccia said the price of the drug can increase during each step in between, such as when a PBM gets involved in step three to negotiate the price on behalf of a health insurer.
“My impulse would be to say there are too many middlemen in that supply chain, but I would argue that it is less a question of how many middlemen, but what are the incentives that drive those middlemen,” Ciaccia said.
The Pharmaceutical Care Management Association, or PCMA, represents PBMs.
When reached for comment, PCMA referred Spectrum News to a statement from a previous Spectrum News story:
“There are significant cost fluctuations among competing products in the generic drug market. Pharmacy benefit managers work on behalf of health plan sponsors and consumers to protect against these drug price fluctuations.”
Ciaccia said more PBM reforms are necessary. He wants to see more regulations for what can be in a PBM contract, and he said pharmacists should have more of a say in their PBM contract.
The executive director of the Ohio pharmacists association said pharmacists should have more bargaining power on drug pricing and how much they keep on a sale.
The PCMA said in its previous statement that any reimbursements made to a PBM reflect the agreed-upon amount and timeframe in the contract.
“PBMs are now in the middle of almost 90% of prescription drug transactions,” Ciaccia said. “The largest three PBMs make up almost 80% of the entire marketplace at this point. So think of it this way: if I’m a pharmacist, and I want access to my patients and my community, I have to accept the PBMs terms in order to get access to the patient.”
The Ohio Pharmacists Association believes clawbacks by PBMs can eat away at the bottom line of a pharmacist and believe they may be why the number of independent Ohio pharmacies have shrunk from 1,200 to around 500 since 1988.
Ciaccia said a pharmacy would likely have to charge patients completely out of pocket if they didn’t work with a PBM, since insurance likely wouldn’t cover them.