PBMs
Loren Bonner
How does a pharmacist tell a patient who she’s been seeing for the past 12 years—a patient who gives hugs on almost every encounter—that they can no longer serve her? Because of PBM practices, Chichi Ilonzo Momah, PharmD, owner of Springfield Pharmacy in Springfield, PA, is faced with this prospect. She’s dreading the day this conversation will have to take place.
“Patients drive to see me,” said Momah. “I’m part of their health care journey.”
PBM business practices, including patient steering, mandatory mail order, and control of formularies, are limiting patient access to affordable medications and to local pharmacies like Momah’s.
“It’s not allowing me to give my patients the quality, high-touch service that differentiates me from my competitors. But if I’m losing money, I can’t be there as a business,” Momah said.
When Momah spoke about PBM reform at a White House health care roundtable back in March 2024, she felt a call to educate.
“Most politicians and federal officials only know the surface level—they don’t know the effects of all these political things,” said Momah. “It’s about my patient Maggie who can’t get the medications she needs when she needs them.”
Through these patient stories, Momah felt she got through to a lot of officials in the room that day. She said so many people came up to her afterwards—even the camera people or those in nonofficial positions—telling her that they or someone they know is experiencing difficulties accessing medications.
Meager reimbursements and a slew of PBM practices are making it hard for pharmacies around the country to stay afloat. The ACT Pharmacy Collaborative, a partnership with CPESN and pharmacy academia, reported approximately 1,278 pharmacy closures, including independents and chains, in 48 states as of May 2024.
All 50 states have passed some kind of PBM reform at one time or another, and momentum is building with more attention being brought to the issue.
“This topic has been a focus for the state pharmacy associations for many years and the increased attention from other stakeholders in recent years has been helpful in raising awareness of the issue and translating that to state action,” said Krystalyn Weaver, PharmD, executive vice president and CEO of the National Alliance of State Pharmacy Associations.
On the federal level, the call for PBM reform is even more urgent. However, Congress has failed to act on PBM reform legislation in 2024, as it has in previous years.
Progress in states
Historically, the federal government often adopts state policy innovations, said Weaver.
“Issues as widely ranging as child labor laws, women’s voting rights, and Medicaid expansion to cover low-income children and pregnant women started with a swell of state activity first,” she said. “The growing state momentum may be the push Congress needs to make federal PBM reform a reality.”
In 2024, a law was signed in Washington State that prevents spread pricing, allows small pharmacies to appeal all claims, gives patients’ rights when receiving mail order medication, and provides other important protections.
In Kentucky, the governor recently signed a law that goes into effect in 2025 and will prohibit patient steering by health plans or PBMs, ensures adequate pharmacy access within PBM networks across Kentucky, and guarantees transparent and fair reimbursements to all pharmacies.
These are just a few examples of successes in states that support patient access to the services pharmacists provide—including access to medications and an affordable price with fair reimbursement, said Weaver.
In March 2024, the Government Accountability Office (GAO) released a report focused on five state laws that regulate PBMs.
States that were called out include Arkansas, California, Louisiana, Maine, and New York. Each of these states has enacted a broad range of legislation regarding PBMs serving private health plans. New York just made a big transition in their Medicaid program to carve out PBMs.
GAO officials reviewed the laws and interviewed state regulators, state pharmacy associations, and state health plan associations, among others. They found that except for Arkansas, the other four states—California, Louisiana, Maine, and New York—have adopted laws imposing a duty of care on PBMs.
The laws range from requiring a fiduciary duty to “lesser” standards such as a requirement to act in “good faith and fair dealing.” These states have enacted laws about drug pricing and pharmacy reimbursement requirements, transparency, and pharmacy network and access requirements.
The report noted that giving regulators broad authority was more effective than implementing specific statutory provisions, as this enabled regulators to address emerging issues without new legislation.
Some of the regulators interviewed for the report also highlighted the importance of robust enforcement of PBM laws and penalties to enforce the measures, while others stressed that having clear reporting requirements and definitions had a positive effect on enforcement.
Strategies to stay afloat
Many community pharmacists still have to supplement their revenue streams in various ways to offset losses. At The Prescription Shoppe in Williamsburg, VA, for instance, co-owner Jade Ranger, PharmD, said they recently learned about the website MatchRx.com for independent pharmacy owners to buy and sell non-controlled, non-expired, overstock drugs for a specific patient’s need.
“My husband has already sold $8,000 worth of inventory and thinks that it is very beneficial,” said Ranger, who owns the independent pharmacy with her husband. “We need to do everything that we can to combat the PBMs and unfair DIR practices.”
Momah said she’s been trying to perform more non-PBM services. For example, this past flu season, she increased the pharmacy’s goal for the number of flu shots they planned to administer.
“We did 4,000 flu shots last year, so I said ‘let’s try to do 5,000 this year,’” said Momah. “We are trying to offset the negatives in these ways.”
Mostly through social media videos, Momah is also making a concerted effort to promote supplements to increase e-commerce sales.
“I’m trying to think outside the box,” she said. ■
PBM practices and DIR fees
DIR fees are price concessions negotiated between PBMs and pharmacies participating in Medicare Part D networks. Retroactive DIR fees are assessed weeks, or even months, after Part D beneficiaries’ prescriptions are filled, resulting in pharmacies realizing only long after the prescription was filled that they did not recoup their costs. Between 2010 and 2020, CMS reported that retroactive DIR fees increased by a staggering 107,400%. These fees also result in patients paying more at the pharmacy counter for their prescription drugs.
An October 2019 paper published in reported that one in eight pharmacies closed between 2009 and 2015. Independent pharmacies operating in underserved areas bore the brunt of the closures, but retroactive DIR fees affect pharmacies of all sizes. This is an additional harm to seniors and millions other Americans who need access to local health care providers. ■