By admin 
As customers at Adams Family Pharmacy in Cuthbert, Ga., picked up their prescriptions on a warm summer day, some stopped by for coffee, ice cream, home-baked cake or cookies.
It wasn’t a bake sale, but the sweets provide additional revenue as pharmacist and co-owner Nikki Bryant works to increase the profitability of her town square business.
Bryant said she’s doing all she can to strengthen it against a powerful force that threatens her and other independent pharmacists: the middlemen that manage virtually all prescriptions written in the U.S., called pharmacy benefits managers, or PBMs. These healthcare facilities act as brokers between drug manufacturers, pharmacies and health insurers and have drawn criticism from Congress, the Federal Trade Commission and state lawmakers for their role in the increase in drug prices.
Bryant and other independent pharmacists say PBMs not only increase costs, but also make it more difficult for patients to access medications. So they were hopeful about state legislation this year that would have increased their reimbursement to match the average prices paid to retail chain pharmacies through the state’s employee health plan. But Governor Brian Kemp vetoed the bill.
Kemp mentioned a budget estimate that it would cost the state as much as $45 million a year and said “the General Assembly failed to fund this initiative.”
An analysis from the American Pharmacy Cooperative, which represents independent pharmacies, underscored reform efforts in Georgia against pharmacy benefit managers, assessing the price difference paid to a North Georgia pharmacy and nearby chain stores.
The analysis early this year found that chains were paid well beyond the family business for many of the same drugs: For example, the chains received an average of nearly $54 for the antidepressant bupropion, while Bell’s Family Pharmacy in Tate, Georgia got $5.54, the analysis said . For a blood pressure drug, amlodipine, chain pharmacies received an average of $23.55, while Bell’s received $1.51.
Andy Miller
/
KFF Health News
Pharmacist and co-owner Nikki Bryant says coffee and homemade sweets bring in additional revenue at Adams Family Pharmacy because the company loses money filling many prescriptions.
Bell’s Family Pharmacy closed earlier this year.
“The disparities in Georgia are incredible,” said Antonio Ciaccia, who runs the Ohio-based consulting firm 3 Axis Advisors. “As a pharmacist you have no control over which medications you do and do not provide.”
By controlling prices and availability, managers ensure patients and employers spend more on drugs, according to the Federal Trade Commission and pharmacy groups. On September 20, the FTC sued three of the largest PBMs: CVS Health’s Caremark, Cigna’s Express Scripts and UnitedHealth Group’s Optum Rx, which together control about 80% of U.S. prescription drug sales. The agency said they created a “perverse drug discount system” that artificially inflates the price of insulin. Each company denied the allegations.
The lawsuit followed a damning FTC report in July it said that the “dominant PBMs can often exercise significant control over what medications are available, at what price, and which pharmacies patients can use to access their prescription medications.”
The trade group representing PBMs, the Pharmaceutical Care Management Association, said the insulin market is working well and blamed drugmakers for historically higher prices of the drug.
However, Bryant and other independent pharmacists say they lose money filling certain prescriptions, while the fees benefit chain pharmacies like CVS, which have business ties to pharmacy benefit managers. And even chain pharmacies have been cutting back, with CVS, Rite Aid and Walgreens announcing layoffs or store closures in recent months.
“PBMs are like the mafia,” Bryant said. “They pay us what they want to pay us. They are sucking all the money out of healthcare.”
Pharmacy benefit managers will charge some health plans more for a drug than what they reimburse a pharmacy and keep the extra money as profit, critics say. This practice is known as ‘spread pricing’. Big PBMs are also taking money from drugmakers as a “rebate” to give their drugs preferential treatment on health plans’ drug lists, independent pharmacies say. And by favoring certain pharmacies with which they have business ties, experts say, these drug brokers are helping shut down independent stores like Bell’s.
The veto by Kemp, a Republican, came despite the GOP-led General Assembly voting overwhelmingly in favor of Senate Bill 198 on the final day of the legislative session.
Kemp spokesman Garrison Douglas said, “The Governor continues to fully and wholeheartedly support Georgia’s independent pharmacists and the need for PBM transparency.”
In his veto message, Kemp expressed support for an investigation into drug reimbursements by independent pharmacies and PBM practices. And he said independent pharmacists will get an additional $3 dispensing fee on state employee prescriptions this year.
The state Department of Community Health, which oversees the State Health Benefit Plan, told KFF Health News that CVS Caremark, the PBM that handles the state’s civil service affairs, provided the cost estimate that Kemp used to justify his veto.
Community Health spokesperson Fiona Roberts said the department did not have time to conduct its own analysis.
CVS Caremark said it used historical claims data to calculate the cost impact of the higher reimbursement.
At the national level, criticism of PPE practices increased over the summer with the Federal Trade Commission report.
The Pharmaceutical Care Management Association pushed back, saying the report is “based on anecdotes and comments from anonymous sources and self-interested parties and is supported only by two carefully selected case studies believed to be representative of the entire market.”
Members of both parties in Congress have tackled PPE reform. Members of the House of Representatives recently introduced another proposal known as the Pharmacists Fight Back Act, which supporters say would increase transparency, limit costs for patients, ensure they get the benefit of discounts from would protect drug manufacturers and their pharmacy choices.
The consolidation that has combined health insurers with PBMs — including their own retail, mail-order and specialty pharmacies — has created financial giants, said U.S. Rep. Buddy Carter, a Georgia Republican and a pharmacist. “I’m interested in picking them up,” he said.
Alexander Oshmyansky, co-founder of Mark Cuban Cost Plus Drug Company, said the PBMs siphon off about a third of the $400 billion spent annually on pharmaceuticals.
“What we could do as a society with $100 billion, instead of paying some companies to process payments for drugs,” Oshmyansky said.
PCMA, the trade group, cited a report funded by the three largest pharmacy benefits managers who said their operating margins are less than 5%.
And the group says discussions about reform in Congress “reflect a one-sided view that stems directly from the pharmaceutical industry’s blame game, which aims to smear PBMs to keep prescription drug prices high and drug company profits to increase.”
However, underpayments by PBMs have accelerated closures of regular pharmacies across the country, according to the National Community Pharmacists Association, which represents independent pharmacies.
The U.S. is losing nearly one such pharmacy a day, said Anne Cassity, the association’s senior vice president. Rural pharmacies, which are difficult to reach for patients without transportation, are especially vulnerable, she said.
Bryant’s two pharmacies serve several counties, including patients with disabilities or without transportation. The costs for patients: zero.
Most states have adopted some form of oversight or restrictions on pharmacy benefit managers.
In Montana, state officials have been collecting financial reports from pharmacy benefit managers for the past two years after passing a bill to promote transparency in these companies.
Data from 2022 shows that rebates in Montana are rarely given directly back to people who buy prescriptions. Instead, the PBMs pocket them or send them back to health plans.
Josh Morris, owner of three independent rural pharmacies in southwestern Montana, said his pharmacies have seen a decline in reimbursement for medications purchased under PBM-managed plans.
Morris said his company routinely breaks even or loses money. “Our plan is that once we get to a certain cash level, we’ll be out,” Morris said. “As in ‘closed.’”
Frank Cote, of the Montana Insurance Commissioner’s office, said the state has tried to make it easier for small pharmacies to do business, but state officials still have no control over how much PBMs pay. Cote said the state will look for ways to support rural pharmacies within existing rules or future legislation.
After Kemp’s veto in Georgia, the pay disparity at pharmacies sparked criticism from an unusual source: within the board of the state Department of Community Health, the agency that administers the state Health Benefit Plan.
Mark Shane Mobley, board member, said at an August meeting that independent pharmacies’ pay in the state employee plan should be comparable to that of a chain. The PBM profits “are going to line people’s pockets way out of state,” said Mobley, president of Avilys Sleep & EEG, a Georgia provider of sleep disorders and electroencephalogram tests. “Our independent pharmacies hire locally. They take care of the local community.”
Community Health Commissioner Russell Carlson said the agency maintains an ongoing dialogue with CVS Caremark, the PBM that handles the state employee benefit plan medications.
“We don’t bury our heads in the sand. We know there are some frustrations in this area,” he said. “But we recognize that we have contractual responsibilities.”
In Cuthbert, Bryant said she can make more profit from cake and coffee than from many drugs.
Still, she’s in business, even as a nearby CVS pharmacy recently closed. “We surpassed them in terms of service,” Bryant said.
Montana correspondent Katheryn Houghton and senior correspondent Arthur Allen contributed to this report.
KFF Health News is a national newsroom that produces in-depth journalism on health issues and is one of the key operating programs at KFF – an independent source of health policy research, polling and journalism. Learn more about KFF.