For years, the FTC opposed state attempts to regulate PBMs. While he argued that PBMs were undermining competition and raising prescription prices, lawmakers in New York were getting the opposite message from the nation’s top antitrust enforcement agency. Gottfried initially found that it was hard to persuade some of his colleagues. Several years ago, he began pushing for legislation to block PBMs’ anticompetitive practices and mandate that they disclose to state regulators and health insurers details of their financial arrangements with drug makers. PBMs “operate largely in secret and don’t seem to be under almost any legal obligations,” says Gottfried. PBMs are not required by federal law to disclose rebates they receive from drug makers or the spread between what they’re paid by insurers to fill a prescription and how much they pay out to the pharmacy that does so. In Ohio alone, two PBMs were found to have charged the state $224 million more than they reimbursed pharmacies in 2017. At the same time, PBMs have been bilking public health plans, especially state Medicaid programs. PBMs have a documented history of steering patients to their own pharmacies by cutting reimbursements to independent pharmacies, essentially driving them out of business. All three operate their own mail order pharmacies and one, CVS, owns Health, Express Scripts, and OptumRx- control more than 76 percent of the They have since morphed into one of the most highly concentrated and leastĪccountable profit centers in the health care industry. PBMs were established in the 1960s to control drug costs, but To safeguard Americans from concentrated corporate power, had taken a stanceĪgainst state legislation like his that sought to rein in the PBMs. Opposition he faced from another quarter: the Federal Trade Commission, created PBMs manage prescription drug benefitsįor health insurers and state Medicaid programs, and Gottfried was seeing themĮngage in a pattern of price gouging and self-dealing. As chair of the Assembly’s Health CommitteeĪnd a long-time advocate of health care reform, Gottfried has had plenty ofįights with big insurers and providers over the years. Players in his state’s health care system, he was prepared to battle yetĪnother muscular industry lobby. Despite evidence that PBMs undermine competition and raise prescription prices, the FTC-under the leadership of both Democratic and Republican Chairs-has discouraged states from regulating them and allowed the sector to consolidate further through a series of mergers.Īssemblyman Richard Gottfried set out to regulate a group of powerful corporate Pharmacy Benefit Managers (PBMs) were established in the 1960s to control drug costs but have since morphed into one of the most highly concentrated segments in the health care industry.
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