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Under threat from industry ‘middlemen,’ independent pharmacies gain allies in D.C., Frankfort

Pharmacy entrepreneur Mark Cuban had nothing good to say about pharmacy benefit managers, who also are the subject of a Kentucky bill filed by state Sen. Max Wise.


Kentucky Gov. Andy Beshear joined a White House roundtable discussion Monday on prescription drug costs that also featured U.S. Health and Human Services Secretary Xavier Becerra, pharmacy entrepreneur Mark Cuban and several community pharmacists from around the country.


The main topic was insurance industry middlemen known as pharmacy benefit managers, or PBMs, and panelists were unsparing in their criticism, using terms like “price gouging” and trying to “kill off community pharmacies” to describe the practices of some.


PBMs “are sh- – -ing on independent pharmacists,” said Cuban, the colorful and plainspoken former owner of the Dallas Mavericks who founded CostPlus Drug Co. to try to provide affordable prescription medicine to consumers.


In Kentucky, Beshear said the state has saved around $300 million by eliminating outside PBMs from its Medicaid program in 2021 and instead hiring a single company to manage the $1.2 billion a year prescription drug business.


His advice to other states seeking to cut prescription drug costs: “You ought to have one PBM for your state plan, one PBM for your Medicaid plan and they ought to report to you,” Beshear said.


The Pharmaceutical Care Management Association, which represents the PBM industry, released a statement on its website Monday accusing the panel of including those with “vocal anti-PBM agendas.”


PBMs work to try to reduce drug prices and ensure quality patient care, the statement said.


“We share the administration’s goal of lowering prescription drug costs and would welcome the opportunity to work together to make prescription drugs more affordable for patients and employers,” it said.


Panelists were unmoved by such claims, focusing on the PBMs that dominate the prescription drug insurance business.


“The big three PBMs are everything that is wrong with this industry,” Cuban said.

He didn’t name them but they are Caremark, owned by CVS Health; Express Scripts, owned by Cigna, and Optum Rx, a subsidiary of UnitedHealth, according to drugchannels.net, a pharmaceutical business publication.


Two community pharmacists on the panel said the deep cuts and reimbursement below costs from PBMs threaten their livelihoods and service to their patients.


“If community pharmacies like me go out of business, what options do those patients have?” asked Pennsylvania pharmacist Chichi Ilonzo Momah.


Panelists urged officials at Health and Human Services and the Federal Trade Commission to do more to crack down on unfair practices of PBMs.


FTC Chairwoman Lina Khan said her agency is looking into the matter.


“If we find evidence of illegal practices, we will not hesitate to act,” she said.


In Kentucky, PBMs have come under fire in recent years from lawmakers fielding complaints from their local pharmacists alleging predatory business practices.


In 2020, the General Assembly enacted Senate Bill 50, sponsored by Sen. Max Wise, R-Campbellsville, that directed the state to cut out multiple PBMs from its Medicaid program and instead hire a single company to report directly to the state.


The result was nearly $300 million in savings — despite claims from PBM representatives it would cost the state money, state Medicaid officials told lawmakers in October.


SB 50 was signed into law by Beshear, a Democrat, who Monday hailed it as an example of bipartisan cooperation with the General Assembly, dominated by a Republican supermajority.

Wise now is sponsoring Senate Bill 188, meant to reform practices of PBMs in the commercial insurance market in Kentucky.


Benjamin Mudd, executive director of the Kentucky Pharmacists Association, said further controls on PBM practices could help Kentucky’s struggling, independent pharmacists, some of whom have been forced to close.


“They just continue to siphon money out of the system,” he said.


Wise’s SB 188, he said, “is a last-ditch effort to help a lot of pharmacists barely scraping by.”


Reporter: DEBORAH YETTER

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