Q&A: Community Pharmacies

Q: How do Pharmacy Benefit Managers (PBMs) inflate prescription drug costs?

A: When I make my 99 county visits across Iowa, I hear from Iowans about the high costs of prescription drugs and the sticker shock at the pharmacy counter. It turns out that sticker shock is a two-way street for independent community pharmacies. This summer, I visited a community pharmacy in Estherville and discussed the financial hardship it faced with retroactive fees collected by Pharmacy Benefit Managers (PBMs). They are the third-party companies who manage prescription drug benefits on behalf of health insurers and employers.  These retroactive fees are called Direct and Indirect Remuneration (DIR) and underscore the complicated pricing structure for prescription drugs that hurt community pharmacies and cost consumers more out of pocket. The secrecy cloaking the true cost of prescription drugs allows prices to be inflated along the murky supply chain before it reaches the consumer’s medicine cabinet. DIR started out as a way to ensure rebates and price breaks from drug manufacturers didn’t result in the government paying more for drugs.  However, between 2010 and 2020, the Centers for Medicare and Medicaid Services (CMS) reported retroactive DIR fees increased by a whopping 107,400%. The PBMs are collecting more than $9 billion a year from pharmacies. In some cases, PBMs claw back payments from pharmacies even a year after the point of sale. As a result, Iowa pharmacists tell me seniors are paying more than they need to at the pharmacy counter. Another community pharmacist in Dubuque called into my teletown meeting in September to weigh in on this issue. The community pharmacies are getting squeezed by PBMs and it’s making it harder for them to stay in business. This business model is unpredictable, unfair and unsustainable. In Iowa we have 300 independent pharmacists serving Iowans in local communities across the state. If a community pharmacy closes its doors because it can no longer afford to stay open, Iowans are left without convenient access to on-site medication therapy management with a trusted local health professional. 

Q: What are you doing to help local pharmacies and their patients?

A: First of all, I wrote bipartisan legislation that would end DIR fee claw backs. CMS issued a rule to end them and I pushed to get those regulations in place. However, that’s just one piece of the problem. Big Pharma needs a giant dose of sunshine to hold prices down and hold stakeholders along the entire supply chain accountable. My Prescription Drug Pricing Reduction Act would reform Medicare Part D to help lower drug costs $72 billion for seniors and save the taxpayer $95 billion. It would cap out-of-pocket expenses, eliminate the donut hole and cap rising drug prices at the inflation price index. It also includes critical transparency and accountability measures that were omitted in the partisan massive tax and spending bill. In the last few years, I’ve helped enact a series of bills that will save taxpayer dollars and lower costs for patients. The CREATES Act, the Right to Rebate Act and the Patient Right to Know Drug Prices Act and other reforms enacted so far this Congress will save $9.6 billion over the next decade.  Not only that, it brings a dose of common sense to the pharmacy counter. For example, the Patient Right to Know Drug Prices Act prohibits a health insurance plan or pharmacy benefit manager from restricting a pharmacy from informing a patient about differences between the out-of-pocket cost of a drug and the cost of the drug without health insurance coverage. In other words, if a patient can pay less for a drug out-of-pocket instead of using insurance, the consumer ought to be told that information. I’m also pressing CMS for answers on the implementation of a real-time benefit tool that empowers seniors to know more about the true cost of their medications. In my years of fighting corruption and wasteful spending, I’ve learned sunshine is truly the best disinfectant. Transparency brings accountability. And that’s exactly what I’m seeking to accomplish with my bipartisan PBM Transparency Act. As consolidation shrunk the number of players in the pharmaceutical supply chain, Americans saw drug prices go up. We’ve seen this happening in Big Tech and Big Cattle and why I use my senior position on the Senate Judiciary to strengthen enforcement of our antitrust laws. In this Congress, I’m building bipartisan coalitions, holding hearings and getting bills passed through the committees of jurisdiction. Sen. Maria Cantwell and I got our PBM Transparency bill passed 19-9 out of committee. It would prohibit PBMs from engaging in spread pricing. This is where PBMs charge an insurer more than they charge the pharmacy, and then pocket the difference. Iowans call that gaming the system. That’s why I’m working to restore competition and strengthen transparency. Government price controls will unravel incentives that invest in lifesaving cures and treatments. That’s certainly not what Iowans who have loved ones fighting cancer, Alzheimer’s or other chronic diseases want. There’s a better way and I’ll work with anyone to cut drug prices without cutting cures.