On Feb. 16, Sen. Charles Grassley provided testimony to the Senate Commerce Committee hearing: “Bringing Transparency and Accountability to Pharmacy Benefit Managers.”
Grassley has identified pharmacy benefit managers’ tactics as the primary reason for higher pharmaceutical costs to both insurers and consumers. I have been an Iowa community pharmacist and independent pharmacy owner for 45 years, and I agree with Sen. Grassley and thank him for attempting to hold PBMs accountable for their anti-competitive business practices.
Community pharmacists and the patients we serve have suffered the consequences of the PBM’s business practices for years. They are the middlemen who coordinate the purchase of prescription medicines from drug manufacturers, reap in rebates from the manufacturers for preferred placement in their formularies, and their newest tactic is charging pharmacies to participate in their preferred networks.
There are three powerful PBMs in the U.S. that control 80% of the pharmaceutical drug market. PBMs also own pharmacies, both brick and mortar, mail order and health insurance companies. This is an anticompetitive practice that economists call “vertical integration.” Pharmacists and consumers alike thank Grassley for asking the Federal Trade Commission to assess consolidation in the pharmaceutical supply chain and its impact on drug prices with the Cantwell-Grassley PBM Transparency Act. The bill directs the FTC to end well-known and documented PBM practices that drive up consumer costs, namely: spread pricing and clawbacks. Both actions game the well-intended system and hurt consumers, our patients.
The PBMs are also guilty of using their backroom tactics to block access to lower-priced prescription drugs from coverage under the Medicare Part D and private insurance programs. There are many generic drugs available in the marketplace, however PBMs do not allow their use and steer patients to costlier branded medications to pocket larger rebates from manufacturers. PBMs bring little value to the health care system but find ways to siphon money out of manufacturers, plan sponsors, employers, pharmacists and patients.
On behalf of the patients we serve, fellow taxpayers and pharmacists, we thank Sen. Grassley for his efforts.
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Robert Greewood is a pharmacist and a former member of the Waterloo City Council.