About

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

During Florida’s 2022 Legislative Session, the EMPOWER Patients coalition championed House Bill 357, legislation that addressed a technicality in Florida Statute that allowed PBMs to operate without any regulation. The bill moved PBM regulations from pharmacy code to the statute that covers the Office of Insurance Regulation (OIR), giving OIR explicit enforcement authority over PBMs, particularly as it relates to the routine audits PBMs conduct on pharmacies. 

House Bill 357 (2022) Requires PBMs to:

• Pay a $10,000 fine if they do not register with OIR
• Notify a pharmacy at least seven days before an audit
• Conduct pharmacy audits within 24 months after a claim is submitted
• Reimburse a pharmacy that was denied payment due to a clerical error

The bill, which also enabled a pharmacy to make an appeal as to whether a claim payment is due and the amount of a claim payment, passed with unanimous, bipartisan support in both the Florida Senate and House of Representatives and was signed into law by Governor Ron DeSantis on June 20, 2022.

In early July of that same year, Governor DeSantis took additional action to lower prescription drug prices, issuing Executive Order 22-164 to establish transparency and accountability for PBMs doing business with the state. Most importantly, it prohibited spread pricing and reimbursement clawbacks, which occur when PBMs claim prescription drug overpayments caused by patients’ copayment amounts being set higher than the drug costs.

An independent report conducted by Milliman in 2020, which used data from the Florida Agency for Health Care Administration, showed that PBMs dealing in the state’s Medicaid program profited an astounding $89.6 million in taxpayer dollars annually.

EMPOWER Patients intends to build on the momentum recently generated by both the legislative and executive branches to codify PBM reform in Florida Statute, ensuring it applies to all PBMs, not just those that are state vendors.