My opinion: Oregon patients, pharmacies suffering at hands of pharmacy benefit managers

The recent article appearing on the Portland Tribune, “Oregon second worst in the nation for retail pharmacy access, new analysis finds” along with in-depth articles from outlets like the New York Times and Wall Street Journal all drive home a hard truth: Pharmacy benefit managers (PBMs), profit-driven middlemen who negotiate drug prices between manufacturers, health insurance plans and pharmacies, are bad for the country and bad for Oregon.

Not only are they driving up prescription drug costs, but they could make community pharmacies extinct in our state if action is not taken by the state Legislature and Congress.

PBMs work on behalf of health insurers, negotiating prices insurers pay, dictating what drugs are covered and setting prices that patient co-pays are based on. Nationally, the three largest PBMs are owned by publicly traded insurance companies or major health conglomerates. These three control 80% of the prescription drug market. Evernorth is owned by Cigna; Optum Rx by UnitedHealth Group; and CVS Caremark by CVS Health. Such vertical integration of health services creates multiple conflicts of interest that hurt Oregonians.

First, PBMs line their pockets at the expense of patients. PBMs operate with two different prices — a net price reflective of negotiated discounts and rebates for them and a list price for patients that is used to calculate co-pays and out-of-pocket expenses. PBM discounts are too often used to raise PBM profit margins rather than to lower what patients pay for their prescriptions. Net prices may be growing at historic lows, but patients are not realizing lower costs, thanks in large part to PBMs.

PBMs also charge fees tied to the price of medicines, meaning they make more money on higher-cost medicines. These fees incentivize them to often deny or limit coverage of lower-cost generics and biosimilars, and instead forces patients to purchase higher-priced prescriptions.

But it’s not just patients that are being hurt by PBM practices, taxpayers and community pharmacies are being impacted as well. Between 2008 and 2022, the number of independent pharmacies in Oregon dropped from 248 to 90. Just last year there were 36 closures. When a community pharmacy closes, patients often lose their most accessible health care provider and, especially in rural areas, face long trips for something as simple as a prescription refill.

PBMs use their monopoly power to pay pharmacies lower and lower rates with outrageous contract conditions. Pharmacies must either accept them or close. Reimbursements vary significantly and many pharmacies often lose money when filling certain prescriptions, but that burden falls disproportionately on community pharmacies.

Beyond that, they also engage in spread pricing, where they charge payers more than what they pay pharmacies for specific prescriptions and pocket the difference. In 2021, PBMs paid just under $350 per prescription for dimethyl fumarate, a generic version of the specialty drug Tecfidera, and charged the state an average of $2,928, meaning they overcharged the state roughly $2 million for just one drug.

Action to bring more transparency and accountability to PBMs is needed to make medicines more affordable and accessible for Oregonians and stem the tide of pharmacy closures.

First, patient co-pays should be based on list prices of drugs and PBMs should be required to fully disclose rebates, administrative fees and other payments they receive so that patients can benefit from the negotiated savings. Patients should never have to pay more for their medicine than their insurer pays.

Second, PBM fees should be based on the value of the services they provide, rather than on a medicine’s price. This would prevent PBMs from purposely limiting access to cost-effective alternatives and force patients to pay more for prescriptions.

Third, spread pricing should be prohibited to save money and ensure everyone is getting the best deal possible.

Lastly, ending patient steering will allow people to get the medicines their doctors prescribe at the pharmacy most convenient for them, rather than at one that profits the middleman.

Sen. Ron Wyden has introduced legislation to tackle PBM abuses, and other members of the delegation have co-sponsored legislation that we hope to see pass. In Oregon, the state Legislature is taking the problem seriously. Rep. Rob Nosse of Portland, chairman of the House Interim Committee on Behavioral Health and Health Care, recently convened the first meeting of a “PBM workgroup” to bring a PBM reform bill forward during the 2025 legislative session.

We need Congress and the Legislature to advance solutions to keep drug costs low and ensure that Oregonians still have access to their community pharmacies.