Prescription drugs can be expensive. Costs can be shocking — and sometimes outright prohibitive — for someone taking a long-prescribed pill for anything from high blood pressure to anemia, or who has dealt with a surprise round of antibiotics.
Prescription prices also can vary from pharmacy to pharmacy, sometimes dramatically. That’s primarily based on the negotiating strength of pharmacy benefit managers, or PBMs — “middlemen” who work as go-betweens connecting drug manufacturers and pharmacies. Often, those middlemen negotiate prices many patients say are just too high, all while chipping away at already dwindling reimbursements for pharmacies.
In fact, proponents of reforming PBMs say these cost-negotiating tactics not only hit patients in the wallet, but independent pharmacies as well. Without the larger network of money and support chains like Rite Aid and Walgreen’s depend on, these smaller pharmacies are quickly dissolving straight out of existence.
With Democrats taking control last year, state senators decided it was time to clip some of the wings of these PBMs. Albany-based Sen. Neil Breslin introduced a bill designed to create more transparency when it came to prescription drug prices, providing reports about PBM income, where money was spent, and how much they kept. The hope was to curb the profit PBMs were pocketing based on how high above the manufacturer price they could charge pharmacies.
“If you have insurance, and you have drug benefits covered, then there is supposed to be a middleman between you and your doctor and your pharmacy where you’re getting your drugs,” said state Sen. Gustavo Rivera, who co-sponsored Breslin’s bill. “What we’re seeing in the state of New York and across the country, there’s a lack of transparency, affordability and fairness.”
Some of the larger PBMs in the country include Express Scripts — now owned by Cigna — OptumRx from UnitedHealth Group, and CVS Caremark, owned by pharmacy and convenience store chain operator CVS Health. Rivera and other bill sponsors wanted to simplify what they described as the many layers of health care. The majority of the senate agreed, as did a majority of the Assembly. Who wasn’t on board? Gov. Andrew Cuomo, who vetoed the bill just as 2019 ended.
continue to struggle
Commonwealth Fund, which has researched health care in the country for more than a century, determined that while PBMs have been found to lower costs, they’re also incentivized to favor higher-priced drugs, as their rebates are usually calculated from a percentage of the manufacturer’s price.
“PBMs insist that they save money in the system, that they make it so the system is more effective,” Rivera said. “We want them to evidence that, not just to tell me.”
Last year, pharmacist Vincent Mazzamuto told The Riverdale Press that Sedgwick Pharmacy was cutting employee hours as the store struggled to make ends meet. The culprit, according to Mazzamuto? Reimbursements negotiated by PBMs.
Now in 2020, he admits that struggle continues, not just for his Sedgwick Avenue shop, but for his customers, too.
“High co-pays are a major issue, the shifting of high costs to the consumer is one issue that we’re trying to address,” Mazzamuto said. “We always try to promote the cheapest alternative. There is a law in New York State that a brand-name drug has to be converted to a generic. Obviously, we follow that rule.”
Cuomo’s veto was disappointing, Mazzamuto said, because now there seems to be little light at the end of the tunnel in an industry still squarely controlled by PBMs.
Where lawmakers are failing to make changes to prescription drug prices, the private market appears to be stepping up. GoodRx is a California-based startup that negotiates with pharmacies and PBMs on its own. GoodRx customers can look up their drug on the company’s website or smartphone app, with the hopes of picking up coupons for that medications, especially when it comes to generic alternatives.
“You might get prescribed Lipitor by your doctor, and we think of that as one drug,” said Thomas Goetz, chief researcher at GoodRx. “But there are, in fact, a dozen manufacturers of atorvastatin, which is what the generic is called. Each one of those, and each dose, or strength, has a different price. And when you add a dozen different pharmacy chains, or a dozen PBMs, you get a tremendous variety of complexity and prices.”
The goal of upstarts like GoodRx is to remove some of that price disparity from the market by locating the best prices.
“One of the things that’s happening — there has to be some agency on the part of the consumer,” Goetz said. “The default, or normal behavior, for people has been if you have insurance, pay with your insurance. People need to say I want to pay using cash with this coupon. One of the things we’re trying to do is just teach people that they have a choice, and not use their insurance when appropriate.”
Goetz, like many others, has noticed insurance co-pays getting larger as insurance companies pay less, potentially creating more of a struggle for people trying to pay prescription drug costs.
Keeping the fight alive
Rivera refuses to give up despite Cuomo’s veto. He hopes to re-introduce the bill during the 2020 session.
Rivera also recently proposed a new drug assistance program, run by the state’s health department and based on the HIV/AIDS assistance program. It would provide help for people in need of “life-saving” drugs, like insulin for diabetics.
Insulin prices have skyrocketed in past years despite the treatment itself remaining virtually unchanged since its discovery, a microcosm of larger issues surrounding drug prices.
Targeting drug companies charging high rates is also on the table, the senator added.
“We can go after drug companies that are profiting illegally, we can go after pharmacy benefit managers that might not be doing the right thing and actually costing us more money than we’re actually saving,” Rivera said. “We can be doing all of those things, and we should.”
Rivera is curious about Cuomo’s issues with the original bill since the governor didn’t express any critical thoughts about it, and hopes he can address them by the time he reintroduces the bill later this year. In the meantime, he said, patients, pharmacies, and health care providers are all struggling.
“Doctors used to be able to write a prescription and not worry about how it gets paid for,” Goetz said. “I think that, increasingly, doctors are trying to be more mindful about if they write a prescription, will the patient be able to afford it? What are they putting their patient on the hook for there?”