By Donaldo M. Hernandez
03 Jul 2024, 06:28 AM EDT
As a physician who serves low-income communities, I understand the unique health challenges they face. Many of my patients are farmworkers from Mexico, and a significant portion are indigenous people who speak Spanish as a second language. They are often unfamiliar with the complexities of the U.S. healthcare system, leading to confusion and worse health outcomes when a pharmaceutical entity denies them access to a prescription drug they need, and they are unaware of their options for advocating for themselves. To ensure our local communities can access the treatments they need for better health, lawmakers should support efforts to reform insurance industry middlemen who continue to drive up out-of-pocket costs at the pharmacy counter.
Pharmacy benefit managers (PBMs) work between health insurers and drug manufacturers to negotiate the purchase price of medications on behalf of the health insurance plans they represent. However, with little transparency or regulatory oversight, PBMs have become one of the most influential stakeholders in the healthcare industry. PBMs use their influence to decide what treatments patients have access to, how much they will have to pay out of pocket to access treatments prescribed by their doctor, and more.
In California, there are millions of patients living with at least one chronic disease, such as heart disease, asthma, and diabetes, and a significant number of those patients suffer from multiple chronic conditions simultaneously. For these individuals, consistent, uninterrupted access to prescribed treatment plans is critical to ensuring they can manage their symptoms and live healthy lives.
However, in the name of cost containment for the health plans they represent, PBMs continue to impose barriers to drug access and affordability, forcing many patients and providers to overcome obstacles and delaying or blocking access to an effective treatment plan. PBMs often steer patients toward higher-cost drugs and pharmacies, impose substantial administrative costs, and compensate pharmacies significantly below their actual cost of acquiring prescription drugs.
Three PBMs, all owned by for-profit corporations, control 79% of the entire PBM market in the U.S. Because such a small number of PBMs control so much of the market, they can exert significant influence across the entire healthcare industry. In a practice called differential pricing, PBMs frequently charge health plans more for prescription drugs than they pay to reimburse pharmacies, pocketing the difference to boost their own bottom lines. Worse, PBMs fail to pass on the savings or discounts they realize by purchasing drugs to the patients who rely on those treatments to stay healthy.
Fortunately, California lawmakers have the opportunity to address how these middlemen interfere with the patient-provider relationship, ensure that patients are on the receiving end of any savings negotiated by PBMs, and ensure that PBMs operate transparently.
Introduced by Senator Scott Wiener, Senate Bill 966 (SB 966) would require PBMs to be licensed through the State Board of Pharmacy and not charge health plans more than they pay a pharmacy for a drug. The bill also allows patients to have choice in their health care by allowing them to select their preferred in-network pharmacy, which reduces the influence of PBMs in determining where and when patients can access their medications. Additionally, SB 966 requires transparency in drug rebates and discounts negotiated by PBMs, ensuring that all negotiated rebates are passed along to payers or patients.
As a physician committed to providing affordable, high-quality care to my patients, SB 966 would protect patients from predatory PBM practices and promote a more transparent and equitable healthcare system. It would also help patients not have to make impossible choices between paying for their medications and other essentials of daily living, such as food or housing. When a patient’s out-of-pocket healthcare costs become too high to manage, they are at greater risk of abandoning their treatment plan, which could result in unnecessary emergency room visits or additional medical complications.
PBMs have flown under the radar for too long, and reform of these middlemen is urgently needed to ensure patients can access the treatments their provider prescribes. Fortunately, Congressional leadership is prioritizing transparency in PBM practices, and significant policy action is anticipated before the August recess. SB 966 is a critical next step in improving accountability and oversight of PBM practices.
Donaldo M. Hernandez, MD, FACP, is an internal medicine physician in California.