True PBM Reform Must Include Americans on Medicare

By Saul Anuzis

It has been a long journey in the effort to achieve real reform of the manipulative practices of pharmaceutical middlemen – called PBMs, and end their negative impact on patients, including the nation’s seniors. Pending before both houses of Congress is meaningful legislation championed by key congressional leaders who are working to achieve real PBM reform, and it is time to finish the job for seniors and all Americans – and do so the right way.

However, their efforts have been met by an army of PBM lobbyists who will not accept reform without a fight. PBM special interests have worked actively to frame themselves as standing up against the big pharmaceutical companies as the champions of patients, while working simultaneously behind the scenes to shrink the pool of patients that will benefit from reform – with some advocating for the exclusion of the 57 million American seniors on Medicare.

For those unfamiliar with PBMs, they are hired by large health insurers and employers to negotiate lower prices with drug manufacturers. The problem is PBMs too often manipulate patient access to pharmacies and medications while keeping the negotiated drug discounts to pad their ever-growing profits. PBMs have created a self-enriching ecosystem that serves mainly their interests at the expense of those they serve. Their take from the pharmaceutical supply chain currently results in more than $400 billion annually in revenue, with the PBM market set to reach more than $900 billion by 2030.

Here’s how it all works – or doesn’t work for patients. Say a medication costs $400. A PBM may negotiate that cost down to $200. But rather than pass along that savings to the patient, the PBM keeps that $200 savings and still attributes that $400 cost to the patient. Why does that matter? Because the patient is paying higher premiums for costs that aren’t real, and if the patient owes a 25% deductible at the pharmacy counter, the patient is forced to pay 25% of $400 rather than $200, which is $100 instead of $50. Taking the manipulation one step further, the PBM may then dictate by what means (e.g., only specific pharmacies, mail order) the medicines can be obtained, thereby creating limitations to access and to the provider of the patient’s choice.

For years, PBMs have been able to operate mostly as they wanted, as unregulated middlemen manipulating how patients accessed their medicines. PBMs have been largely unobstructed as they pocketed savings that belonged to patients and chose their pharmacy for them. They also have been free to dictate the price patients paid at the counter, further driving up prescription drug costs. And PBMs certainly have taken their opportunities to ratchet down pharmacy reimbursement to levels that jeopardize pharmacies of all sizes and in all areas, and that further limit access to care.

Drug pricing affects patients broadly, and particularly seniors who rely on multiple medications. One-fifth of older Americans report not taking their medications as prescribed due to cost.[1] Nobody should have to choose between nutrition and life-saving medicines due to cost, while PBMs pocket billions.

A study posted by the National Institutes of Health found that access to better and more affordable care leads to improved medication adherence and better outcomes, which result in better health and lower costs. The reforms being advanced by lawmakers will hold PBMs accountable so patients can have the access to both the necessities of life and the medicines they need.

It is time to end PBM manipulation, and America’s seniors applaud Congressional leaders for their courage in taking on powerful corporate interests on behalf of patients. Real reform is within reach, and it is bipartisan and achievable in an otherwise partisan environment. It is about patients – all patients, and Congress simply cannot let this chance slip away. Seniors are watching closely to ensure that PBM reform includes patients on Medicare – and Medicaid for that matter. PBM reform in name only will not be true reform if it fails to benefit the very patients who need it most.