Ohio attorney general and 38 others call on Congress to stop middlemen from owning pharmacies

They say current setup gives them “power over their own pharmacies’ competition”

Ohio Capital Journal

Reporter: Marty Schladen

Ohio Attorney General Dave Yost on Monday joined the vast majority of state attorneys general in demanding that Congress make a major change in the business of selling drugs. 

They want to prohibit giant health conglomerates from owning both powerful middlemen and pharmacies that compete with the other pharmacies the middlemen serve. The attorneys general say it’s a setup that gives an unfair advantage to the conglomerates, some of which are among the largest companies in the United States.

In a letter to congressional leaders, they said rapid consolidation and “vertical integration” have raised prices, limited competition, and shut off pharmacy access — especially for the most underserved populations.

In Ohio, the once-obscure middlemen — known as pharmacy benefit managers, or PBMs — have been the subject of controversy for more than seven years. When he was still state auditor, Yost investigated their dealings with state agencies, and since he became AG in 2019, he has sued several.

PBMs represent insurers in drug transactions by creating pharmacy networks, reconciling claims, extracting rebates and fees from drugmakers, and monitoring drug utilization. They say they create savings for insurers and consumers, but the bipartisan attorneys general said that’s not the case.

“PBMs were supposed to help consumers access low-cost pharmaceutical care through negotiated volume-pricing discounts, generic substitution, manufacturer rebates, and other tools,” it says. “While the promise of PBMs was to lower healthcare costs, the reality has been the opposite: Healthcare costs in the United States have skyrocketed. PBMs are using manufacturer rebates to increase, rather than decrease, drug prices. Healthcare costs are higher in the United States than any other developed country in the world, but healthcare outcomes in the United States are not equally extraordinary.”

That last assertion is a big understatement. The Commonwealth Fund last year compared health outcomes in the United States to those in nine other developed countries. Our system is by far the most expensive, yet the outcomes it produced ranked dead last.

A spokesman for CVS Health, one of the conglomerates that owns a big-three PBM, said the attorneys general were just trying to help the big drugmakers with their letter. 

“Earlier this week, 38 attorneys general intentionally chose Big Pharma over people by asking the government for more ways to help drug companies make more money,” the spokesman, Phillip Blando, said in an email.

A spokesperson for another of the three conglomerates — Cigna-Express Scripts — didn’t immediately respond to questions for this story.

Blando said that “CVS Caremark does not set the price of drugs, and rebates do not increase the cost of drugs.” However, academic research and the Federal Trade Commission have both concluded that rising manufacturer rebates to PBMs has resulted in higher costs to consumers.

In their letter, nearly four-fifths of state attorneys general said all three companies are a part of why health care functions so poorly in the United States... CONTINUE READING