How U.S. pharmacy groups and legislators are pushing back against PBMs

A recent class action lawsuit in the U.S. between four pharmacies against Express Scripts alleges that the pharmacy benefit manager (PBM) colluded with other smaller PBMs to charge excessive back-end fees to pharmacies. Express Scripts is one of the big players in the American market—together with CVS Health’s Caremark and OptumRx, they control 80% of the market. Express Scripts recently made headlines by bringing a new fee for pharmacies to Canada, which several pharmacy organizations pushed back on. In the U.S., where PBM fees have existed for longer, the National Community Pharmacists Association (NCPA) applauded the class action lawsuit. But it has also been fighting PBMs on a variety of fronts. “[Fighting] PBMs has been like playing a game of whack a mole,” says Douglas Hoey, CEO of the NCPA. “But I think it’s improving. I think we’re turning a corner.” Read: Express Scripts Canada’s new $200 fee for pharmacies raises concerns of U.S.-style PBMs in CanadaHere are some of the highlights of what’s happened south of the border: The Supreme Court ruling The most notable, Hoey says, was a ruling that happened in 2020. In it, the U.S. Supreme Court stated that states could regulate PBMs. The Pharmaceutical Care Management Association had argued that the federal Employee Retirement Income Security Act prevented Arkansas from being able to introduce a law that regulated the amount PBMs reimbursed pharmacies for drugs covered by prescription drug plans. The court ruled 8-0 against this (Justice Barrett recused herself), saying that the act wasn’t applicable in this situation. “That ruling said that states have authority to regulate PBMs in certain ways,” says Hoey, adding that it “helped give states some courage” around their laws. Read: Is it possible Express Scripts Canada will break the camel’s back?State-level legislationThat led to a rush of state legislation. “There was a lot of pent-up energy for states to introduce legislation,” as well as increased awareness of PBMs, Hoey says, and hundreds of state bills have been introduced each year since the Supreme Court ruling. By 2023, all states had passed some sort of legislation regulating PBMs. The most common provision was prohibiting gag clauses on pharmacies, which would prohibit pharmacies from disclosing information to patients, such as talking about lower cost, therapeutically equivalent alternatives, copayment or coinsurance information, or offering patients information about how they can pay a lower price for their prescription. Another common provision is ensuring that patients can lower their medication costs by paying for their medications through manufacturer rebates or coupons or having a patient pay the lesser of a set of approved costs. Read: The Express Scripts discussion is broader for Canadian pharmacyJust under half of states prohibit PBMs from reimbursing non-affiliated pharmacies less than they do affiliate pharmacies, and the same number require PBMs to report rebates and other information to the state. Some states have gone further. In 2017, West Virginia decided the state would act as its own PBM for Medicaid recipients. A 2019 report found that it saved $54.5 million by doing so and paid out $122 million more in dispensing fees to pharmacies. The state also passed a bill in 2022 that says that PBMs must reimburse pharmacies at least the national average drug acquisition cost, plus a professional dispensing fee of $10.49. On the whole, the legislation is “uneven,” says Hoey, with the state-by-state differences common in the U.S. across various issues. But he’s heartened by the fact that states across the political spectrum, from Arkansas to California, have passed progressive reforms. Read: Health minister chides U.S. officials over cost saving scheme to buy Canadian drugsFTC actionsIn the summer of 2022, the Federal Trade Commission began an inquiry into pharmacy benefit managers. “Pharmacy benefit managers often have enormous influence on which drugs are prescribed to patients, which pharmacies patients can use, and how much patients ultimately pay at the pharmacy counter,” the association said in a press release about the move. The ongoing inquiry is looking at PBMs’ fees and clawbacks that were charged to unaffiliated pharmacies, steering patients towards pharmacies they owned, and audits of independent pharmacies that were potentially unfair. Read: Monopoly concerns push U.S. FTC to sue to block Amgen's more than $26B deal for HorizonThe FTC is also looking into the methods, often complicated and opaque, that determine pharmacy reimbursement; administrative restrictions, such as prior authorizations; specialty drug lists and specialty drug policies; and the impact of rebates and fees on the costs of prescription drugs to both payers and patients and on formularies. The agency released nine letters that opposed increased regulatory oversight and transparency for PBMs between 2004 and 2014. But this summer, it withdrew those, saying they “no longer reflect current market realities.”The federal government's reformsThe main focus of the NCPA at the moment is getting legislation passed through the federal bodies in the U.S., says Hoey. Those include the Lower Cost, More Transparency Act, which would reform Medicare in all states, prohibiting spread pricing—where PBMs charge a managed care organization more than they pay a pharmacy—for Medicaid managed care programs. It would also require that PBMs report twice a year on fees and costs to plan sponsors. Independently, other packages are also moving through the government that look at regulating DIRs, spread pricing, and increasing transparency. At the same time, the Centers for Medicare and Medicaid Services have, as of Jan. 1, required that PBMs reimburse pharmacies for Medicare Part D at point-of-sale, removing their ability to claw back reimbursements after the fact. Read: Eli Lilly starts U.S. website to connect patients with new obesity treatment, Zepbound, other drugsLawsuits and arbitration Two other class action lawsuits followed the Express Scripts lawsuit. They centre around direct and indirect remuneration fees (DIRs), which apply to Medicare-covered drugs. PBMs say they are “pay for performance”; many pharmacies see them as excessive claw-backs that are nearly impossible to avoid. The NCPA has also formed TRUST, which will fund investigations, litigations, or arbitrations for pharmacies fighting DIRs around PBM fees. Hoey explains that there’s a process for the dispute to go through arbitration, but arbitration claims can cost more than $1 million for a single pharmacy. Those pharmacies can now assign their claims to TRUST and fight together.It’s another angle, says Hoey—another way for pharmacists to try and get DIR fees back. And it’s another attempt to change the rules around PBMs and pharmacies. Read: Alberta moves to strengthen legislation before proposed opioid class action lawsuit

How U.S. pharmacy groups and legislators are pushing back against PBMs

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