TOPEKA, Kan. (AP) - As consumers express growing concerns over the affordability of medications, several states across the U.S. are actively working to reduce drug prices by targeting pharmacy benefit managers (PBMs). These companies manage prescription coverage for health insurers and have significant influence over medication pricing and availability. Among the most prominent PBMs is CVS, which has invested millions to oppose regulatory measures intended to curb their practices.
Amid mounting frustration over medication costs, affordability has surfaced as a pivotal issue ahead of this year's midterm elections. This year alone, legislators in at least a dozen states have passed laws aimed at restricting compensation for PBMs, ensuring minimum payments to pharmacies, and increasing transparency regarding their operations. Notably, a law in Tennessee will bar PBMs from operating retail pharmacies beginning July 1, 2028, although CVS Health Corp. is currently contesting this through a federal lawsuit to safeguard its 136 retail outlets in the state.
A recent poll conducted by the healthcare research nonprofit KFF indicated that approximately 60% of U.S. adults expressed concerns about affording their prescriptions, with about 40% reporting instances where costs have caused them to alter their medication usage in the prior year—by taking smaller doses, opting for over-the-counter alternatives, or not filling prescriptions altogether.
This year, lawmakers in at least 26 states introduced over 120 bills concerning PBMs, as reported by an Associated Press investigation utilizing bill-tracking software. Roughly a quarter of these bills have progressed through at least one legislative chamber. PBMs, particularly large players like CVS and two others, oversee most U.S. prescriptions and negotiate with manufacturers on both drug prices and coverage options. Critics argue that the consolidation of power among these companies affords them leverage that individual health plans typically lack.
Despite criticism, PBMs defend their role, claiming that their existence is essential for driving down drug prices and that they deserve recognition for the increased utilization of cost-effective generic drugs, which now constitute 90% of U.S. prescriptions. Prem Shaw, president of CVS Health's pharmacy and PBM operations, stated that eliminating PBMs would necessitate creating a new entity to fill their role and dismissed the notion of PBMs being responsible for high drug prices.
CVS's contention in Tennessee highlights its view of the law as a protective measure favoring independent pharmacies, with state Sen. Bobby Harshbarger and co-sponsor Sen. Shane Reeves being chief proponents of the legislation. Independent pharmacy operators, like Lisa Gales of Main Street Pharmacy in Coldwater, Kansas, articulate their struggles with inadequate reimbursement rates from PBMs, leading to reliance on sales of non-pharmacy items to remain viable. Gales reported losing money on 86% of prescriptions filled last year and welcomed a new Kansas law mandating PBMs to pay a $10.50 dispensing fee, although she still views it as insufficient to cover her actual costs.
Conversely, some criticisms label dispensing fees as an additional "pill tax" that could further inflate consumer expenses. Proponents argue that such laws might inadvertently regulate PBM operating incomes and maintain lower medication prices for health plans. States are pushing for PBMs to pass along discounts negotiated with drug manufacturers, although the enforcement of these requirements varies.
As these discussions unfold, patients, especially in rural areas, remain vigilant. Many people, like Faith Sanders, a 79-year-old retiree from Cedar Vale, Kansas, fear that if independent pharmacies shut down due to unsustainable reimbursement rates, they would face relocation issues just to access medications. Others, including some critics of PBMs, question the efficacy of state-level regulations in effectively managing the influence of PBMs, with some advocating for federal oversight instead.
Recent legislative efforts at the congressional level have sought to impose regulations on PBMs. In February, a new law was enacted to prevent PBMs from retaining negotiated rebates on drug prices related to federal Medicare coverage, signaling a shift towards increased accountability and consumer protection in the pharmacy sector.
