Why ‘Pharmacy Benefit Managers’ Are Hurting You And Your Local Pharmacy

So, just who are ‘Pharmacy Benefit Managers’ or ‘PBM’s as they’re more commonly known.

They’re the quiet middlemen that stand between drug manufacturers and your local pharmacy and even though you’ve never heard of them, they know all about YOU.

Pharmacy Benefit Managers were originally created to assist the healthcare industry by acting as a liaison between parties and administering costs and procedures that actually helped everyone.

But over the years they have morphed into a super powerful group of organizations that now dictate how much YOU as a consumer pay for your prescription drugs.

And it doesn’t end there.

PBM’s claim to work for health insurers to get lower-cost drugs from the drug manufacturers but they also claim that drug manufacturers alone set drug-prices

But here’s the reality, according to a study by the IQVIA Institute for Human Data Science, PBM rebates charged to drug manufacturers in 2019 amount to $143 billion, which added nearly 30 cents per dollar to the price you pay for your prescription drugs.

And to make matters worse, the three largest PBM companies in the US control a staggering 76% of all the prescription drug business in the country.

Meaning the vast majority of American’s are overpaying on their prescriptions every day because of PBM’s.

And it doesn’t stop there.

Because the PBM’s also control where you get your prescription drugs as well.

One of the three largest PBM’s in the country is CVS Caremark, which is owned by the CVS Pharmacy Group.

CVS Caremark not only sets drug prices but determines which pharmacies are in their network and the amount that pharmacies will be reimbursed for a prescription.

Doesn’t sound so bad, until you realize that your local independent pharmacy may not be in the PBM’s ‘preferred pharmacy network’ which means that, although you can still get your prescription drugs from your local pharmacy, you could end up paying more for your prescriptions drugs through your co-pay and the local pharmacy receives less reimbursement from the PBM because of restrictive ‘take it or leave it’ contracts.

For independent local community pharmacies, being in a particular preferred network can represent as much as 20 to 30% of their business, so when PBM’s change the rules and change who can be in their particular ‘preferred network’, it can have a devastating effect on their ability to stay in business.

Doug Hoey is the CEO of the National Community Pharmacist Association, who support the growth and prosperity of independent local community pharmacies across the US.

He knows all too well the problem his industry is facing from the PBM’s and recently his organization and the State of Arkansas took the PBM industry to the Supreme Court in a landmark hearing, that if they win, could allow every State in the US to regulate PBM’s and how they conduct business.

“Independent pharmacies serve as a vital safety net for patient care in communities across the country,” said Hoey. “Yet PBM’s have been dodging oversight for years while raking in record profits. For patients, that’s resulted in fewer health care choices and increased out-of-pocket costs. For community pharmacies, the lack of oversight holds them hostage to inflexible, one-sided contracts causing many of these small businesses to close their doors forever. We’re optimistic the Supreme Court will agree that PBM’s do not get to act with impunity from State and Federal law and will issue a ruling enabling States to protect their local businesses and their patients”

Americans pay the highest prices for healthcare and drugs in the world. And if things don’t change, we’ll carrying on paying those prices, be dictated to where we get our medications and we’ll have less choice and places to go, to get it.


Brian Scott-Smith is a local broadcaster and journalist with 20 years experience in the news, TV and Radio business and is the creator and host of the weekly news podcast, Connecticut East This Week, which looks at stories of interest to the communities of eastern Connecticut.

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