John M. Hammond: Reining in pharmacy benefit managers

Julia Maruca’s reporting of issues facing pharmacies should help bring more attention to the subject of prescription benefit managers’ (PBMs) inordinate influence in the pharmaceutical marketplace.

I believe there should be more investigation into the vertical integration of PBMs, health care insurance companies, pharmacies and specialty pharmacies, and I submit the following.

After PBMs emerged in the 1960s, their growth, influence and profitability steadily grew. By the 1990s, drug manufacturers began buying PBMs as a means by which they could improve market share for their product lines. The conflict of interest was all too apparent, so the FTC put a stop to pharmaceutical manufacturers owning PBMs.

Yet now, PBMs have aligned with major health insurers. The top three control upwards of 80% of the prescription drug market. They are: Caremark (owned by Aetna following a merger with CVS), Express Scripts (owned by Cigna) and OptumRx (owned by United HealthCare). Each of the entities also owns mail-order pharmacies and specialty pharmacies. The network of pharmacies owned by CVS is terribly obvious. Rest assured, the cost of drugs dispensed by pharmacies owned by PBMs is fully reimbursed plus dispensing fees. Substantial conflict of interest.

The Department of Defense has contracted with Express Scripts to administer the prescription benefit for its TRICARE health plans, which is the coverage for military retirees. Express Scripts has cut hundreds of independent pharmacies from being able to fill TRICARE prescriptions. (The independent pharmacies in Ligonier are among those cut from the plan.) So essentially the federal government is party to the closing of pharmacies noted in the TribLive articles.

There are two bills working their way through Congress:

• HR 3561 — This bill expands hospital price transparency requirements and establishes additional reporting requirements with respect to prescription drugs and PBMs.

• S 1339 — This act may be cited as the “Pharmacy Benefit Manager Reform Act.”

John M. Hammond of Ligonier held leadership positions in pharmacy and health care management throughout his 27-year Air Force career and in the private sector for 28 years. He worked in community pharmacy and served on the board of a community health center.