EMPOWER Patients is a coalition of patients and independent and community pharmacists and pharmacies focused on increasing access to affordable medication by drastically scaling back the role of pharmacy benefit managers (PBMs) in the prescription drug supply chain.
Pharmacy benefit managers (PBMs) were established in the 1960s to serve as intermediaries between health insurers and prescription drug manufacturers, responsible for regulating prices by handling negotiations and payments within the supply chain. However, by the early 1990s, many PBMs had been acquired by drug manufacturers, which garnered widespread scrutiny and heightened existing concerns about conflicts of interest. Today, following federal orders to divest from the Federal Trade Commission, there are 66 PBMs – a $300 billion industry – with the three largest controlling an estimated 80 percent of the market and serving upwards of 270 million Americans. In fact, Express Scripts, CVS Caremark, and OptumRx are consistently ranked among the top 15 in the Fortune 500.
“…three of the largest PBMs control over 75% of the market, and have far-reaching power to control the pricing, distribution and brands of drugs covered by health plans. In the end, these predatory practices rob patients of medical benefits they desperately need and reduce available options.” – Armando Riera, Miami Chapter, National Association of Hispanic Nurses
Not only are PBMs anti-competition, but they are anti-patient too. These multi-billion-dollar companies are deciding which prescription drugs to cover based on the size of the rebates they will receive from manufacturers, ultimately raising patients’ out-of-pocket drug costs by almost 30 percent. And to make matters worse, they use pressure tactics to steer patients to their affiliated pharmacies, where the prescription drug rebates they will receive are larger, rather than focusing on the best health outcomes for patients.
“The American Medical Association already has serious concerns about PBM business practices…PBM markets require careful scrutiny as less competition and more vertical integration can embolden anti-competitive business practices to the detriment of patients.” – Jack Resneck Jr, M.D., President, American Medical Association
Opportunistic PBMs also practice spread pricing – charging the insurer or managed care plan more than the pharmacy’s reimbursement amount and pocketing the difference – which allows these companies to make anywhere from 18 to 109 times more profit than the average independent or community pharmacy.
And because of PBMs market dominancy, those smaller pharmacies that tend to serve rural and inner-city neighborhoods have virtually no choice other than to accept PBMs’ contracts, receiving steadily declining reimbursements until they are forced to shut their doors.
“These wealthy, influential companies are uniquely positioned to prey on local pharmacies – which are often designed to serve the underserved in rural and inner-city neighborhoods – eliminating healthy competition in order to further line their executives’ own pockets.” – Michael Jackson, Former CEO, Florida Pharmacy Association
Florida’s 2023 Legislative Session brought widespread, comprehensive PBM reform with the history-making bill, the Prescription Drug Reform Act. The EMPOWER Patients coalition championed the Prescription Drug Reform Act as it worked its way through the legislative process, providing resources that underscore the need for PBM reform and explain how the bill provides transparency and accountability in the prescription drug industry.
- Bans clawbacks
- Prohibits mail order mandates
- Bars spread pricing
- Outlaws steering
- Bans affiliate only networks
- Requires PBMs to pass through 100% of all rebates
This legislation, which is perhaps the most comprehensive pharmacy benefit manager reform ever introduced in the nation, passed with unanimous, bipartisan support in both the Florida Senate and House of Representatives and was signed into law by Gov. Ron DeSantis on May 3, 2023.
The Prescription Drug Reform Act built upon House Bill 357 (2022) – which required PBMs to pay a fine if they did not register with OIR, notify a pharmacy at least seven days before an audit, and more – as well as Executive Order 22-164 issued by Gov. DeSantis in July 2022 to establish transparency and accountability for PBMs conducting business with the state.