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Our opinion: State must pursue PBM reform

It’s easy for our eyes to glass over when we hear state legislators are discussing legislation to reform the contract process between pharmacies and drug companies.

Known as pharmacy benefit manager reform, there are three PBM companies that dominate the national market – Caremark, Express Scripts and Optum. According to the National Association of Insurance Commissioners, PBMs work with drug manufacturers, wholesalers, pharmacies and health insurers but only handle negotiations and payments in the supply chain.

One of the worries with the system is the impact on small, independently owned pharmacies. We’ve seen a lot of those small companies go out of business in recent years. In Warren, there’s only one left – Gaughn’s Drug Store. And Scott Newman, who owns the Warren store, is feeling the pinch.

Reimbursements negotiated by pharmacy benefits managers with insurance companies are too low. It’s something chain pharmacies can absorb into their business model due to volume, but for a small pharmacy like Gaughn’s, it’s impossible to stay in business when 10% of your quarterly business is reimbursed at less than the cost you pay for prescription medication.

“We made negative dollars,” Newton said. “That’s just buying it and getting paid for it” and doesn’t include the staff cost to dispense.

House Bill 1993 creates a path for pharmacists to register complaints against PBMs and requires more transparency about rebates and payments made by the PBMs and how they distribute the oney. The legislation also would regulate several PBM practices that unfairly skew the market, such as patient steering, spread pricing and retroactive recoupment of money.

Those who want to have their prescriptions filled by chain pharmacies should be able to do so. But the market shouldn’t be unfairly skewed toward them, either. State lawmakers, and their federal counterparts, should act to level the playing field. Because we know what happens if nothing is done – big pharmacies absorb the small pharmacies, wait times for prescriptions go up and, in particularly busy times, it becomes more difficult to get the medication you need.

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