Pharmacy Benefits Managers (PBMs) Overcharging Taxpayers Assemblywoman Stacey Pheffer Amato
Have you heard of Pharmacy Benefits Managers, better known as PBMs, before? Â Don’t worry, I hadn’t either up until last month when several local pharmacists came to my office with major concerns.
Some background; Â PBMs are third-party administrators that originated in the 1960’s to help process claims for insurance companies and for entities managing prescription drug benefit programs. Currently, PBMs not only facilitate claims, but also develop and manage pharmacy networks, determine drug formularies, set co-pays, and criteria for prior authorizations and the patient’s choice of pharmacy. Essentially PBMs act as a middleman between the patient’s insurance company, who the PBM works for, and the pharmacy, who the PBM reimburses for dispensing the prescription. Got all of that? Sounds crazy, right? Even worse, in NYS there are currently 3 large PBMs that “run the show”: CVS Caremark, Express Scripts and OptumRx. To add insult to injury, these companies control nearly 80% of the prescription benefits market in the U.S. The problem is that PBMs profit at nearly every stage of the supply chain from the drug manufacturer to the patient purchasing their prescription.
PBMs control everything. They can control pricing, what medicines are covered, and how much they will reimburse the pharmacy for dispensing a certain prescription. Through a term known as “spread pricing”, PBMs can charge the State one price for a drug, while paying a lesser amount to the pharmacy that dispenses the drug, and then pockets the difference. In a study cited by the Pharmacists Society of New York[1], PBMs may have pocketed more than $300 million from taxpayers in NYS between April 1, 2017 and March 31st, 2018. By doing this, PBMs are seeking to close down the small, community based pharmacy shops by adding to their cost of doing business while giving them the bare minimum for prescriptions paid by insurance plans.
Now how do we fix this while also saving hundreds of our beloved independent community Pharmacies? Currently, in the State Budget there are two proposals that seek to address the issues associated with PBMs. The first would license and regulate PBMs and the second would address spread pricing as it relates to state funded insurance. Â Both methods would be effective first steps to address issues associated with PBMs.
Small businesses are the backbone of neighborhoods across our city, and here in Queens they are a part of our communities’ fabric. Since day one, I have fought for our small businesses and will work to ensure they are protected. A quote that has stuck with me: “When you buy from a small business, you are not helping a CEO buy a third vacation home. You are helping a little girl or boy get tutoring or sports lessons, and help parents pay a mortgage or a student pay for college”.
As a community, we have achieved so much by coming together, neighbor helping neighbor. As we look ahead to the rest of 2019 and passing the 2019 State Budget, my top priorities are fighting for what this community needs and deserves, and ensuring the best for our families. This is a neighborhood where my husband and I are proud to be raising our children and I am so thankful that I am able to represent you as your Assemblywoman. As always, if you feel passionately about an issue call my office at 718-945-9550, email me at amatos@nyassembly.gov, or stop by and say hello: 95-16 Rockaway Beach Blvd Rockaway Beach, Queens. I look forward to hearing from you!
________________________________________