TALLAHASSEE – Legislators and advocates for reducing costs and improving access to prescription drugs today hailed a new independent study documenting that Pharmacy Benefit Managers (PBMs) have pocketed millions of dollars from the Florida Medicaid system – funds that should have been directed toward health care for millions of low-income residents.
The study, commissioned by the Florida Pharmacy Association and American Pharmacy Cooperative Inc. with data obtained from the Agency for Health Care Administration (AHCA) by the Small Business Pharmacies Aligned for Reform (SPAR), highlights the predatory nature of a handful of vertically integrated PBMs and managed care organizations (MCOs). Legislation reforming Florida’s broken PBM system is supported by numerous other organizations, including Florida Society of Rheumatology, Florida Society of Clinical Oncology and others.
Sen. Gayle Harrell and Rep. Jackie Toledo, who have each filed legislation to rein in predatory PBMs, underscored the need for greater transparency and oversight when it comes to PBMs’ role in Florida. Bills have also been filed by Senator Tom Wright and Senator José Javier addressing PBM issues.
“Pharmacists and communities have suffered under the rule of the PBM industry for years,” said Michael Jackson, Executive Vice President and CEO of the Florida Pharmacy Association. “The PBM industry has been given a license to operate unchecked under a cloak of secrecy and it is long past time for health care to work for Floridians -- not profit-driven pharmaceutical middlemen.”
The study provides concrete evidence that PBMs use a process called “steering” to direct patients to their affiliated pharmacies by requiring that insurance plans cover certain medications only if the prescriptions are filled at those specific pharmacies. These anti-competitive actions by the PBMs restrict consumer access to the pharmacies of their choice and result in higher medication costs. Then, PBMs profit from the higher reimbursements paid to those pharmacies and end up driving neighborhood pharmacies out of business.
Over the past three years, the number of independent pharmacists in Florida has decreased by 15% and it continues to drop due to a business and regulatory climate that short-circuits the free market and allows a handful of PBMs and MCOs to control the market.
The independent study by 3 Axis Advisors reviewed more than 359 million prescription drug claims within Florida’s Medicaid program between 2012 and 2019. The information from AHCA was coupled with data from more than 100 pharmacies to determine the impact PBMs have on the portion of the health care system paid by Florida taxpayers through the Medicaid program.
The firm has previously evaluated the structure of PBMs in New York, Illinois, Michigan, Ohio, Kentucky, Georgia, Virginia, and Maryland.
“Our team has analyzed drug pricing data in numerous other states, but this study is more exhaustive and comprehensive than any we’ve ever produced. The sheer volume of claims analyzed provides an unprecedented view behind the shadowy curtain of pricing in the prescription drug supply chain,” said Antonio Ciaccia, co-founder of 3 Axis Advisors. “The implications outlined in this study show some extremely concerning trends that highlight the warped incentives, pricing distortions, and conflicts of interest currently embedded in state Medicaid programs. While this analysis is focused on the Florida managed care and PBM experience, this report is an alarm bell for state and federal officials across the country that reveals there’s much more to prescription drug costs than meets the eye.”