PUTTCast Host & Executive Director of PUTT - Monique Whitney talks with: 

• Kevin Dwayne - Jacksonville FL w/ Panama Rx 
• Jay Wright - Cocoa FL w/ 5 Points Pharmacy 
• Amy Rodgers - Little Rock AR  w/ City Pharmacy 

A new Florida study, released last week, found that major health care companies using pharmacy benefit managers (PBM’s) have positioned themselves to pocket millions of dollars from the state’s Medicaid system that were intended to lower costs for millions of low-income Floridians. The study found that despite processing less than half of one percent of all pharmacy claims, specialty pharmacies affiliated with PBM’s managed to collect 28 percent of the available profit margin from dispensing prescription drugs.

The study was commissioned by the Florida Pharmacy Association and American Pharmacy Cooperative Inc. using data obtained from Florida’s Agency for Health Care Administration (AHCA) by the Small Business Pharmacies Aligned for Reform.  Smaller pharmacy operators say the report proves that larger, vertically integrated companies that use PBM’s are using “predatory” business practices that short-circuit the free market.

State lawmakers expressed alarm at the news and underscored the need for greater transparency and oversight when it comes to PBMs’ role in Florida, particularly regarding situations where PBM’s and managed care companies own the pharmacies where they direct patients.

“Markets fail when markets get corrupted and that is what has happened here. When the middleman is allowed to own the end-retailer then the middlemen’s incentive to manage cost appropriately for the benefit of the chain is broken,” said State Representative Randy Fine at a press conference to discuss the study.

According to the study, vertically integrated health care companies – that is, companies where the health insurance company and PBM also control their own pharmacies – have a significant advantage in prescription drug pricing and reimbursement rates over smaller pharmacy operations that only focus on dispensing prescription drugs. These large and powerful organizations then use their leverage and contracts with the state to squeeze dollars from their competitors by requiring patients to go to pharmacies where they have a financial interest. This process frequently involves rewarding their own pharmacy operations with significantly higher reimbursement rates from Medicaid, according to the study.

The study provided an example of this situation where Sunshine Health directed 95 percent of all claims for generic cancer drug Gleevac to Acaria, its wholly owned specialty pharmacy. It reimbursed this speciality pharmacy an average of $4,399 above the national average cost for the drug.

“We have a responsibility to assure that there is no manipulation of prices or anti-competitive practices by PBMs and other entities that result in increased costs to patients and push our local pharmacies out of business,” said State Senator Gayle Harrell.

Small pharmacy operations describe PBMs as shadowy prescription drug middlemen whose practices are driving neighborhood pharmacies out of business while reducing access to care for many Floridians.

The State of Florida contracts with PBMs to manage Florida’s Medicaid program in order to negotiate lower drug prices. But the new study concludes that PBMs have actually cost the public millions of dollars by forcing patients to use PBM-affiliated pharmacies and then charging higher prescription costs.

According to Medicaid data contained in the study, one pharmacy in North Miami was responsible for 25% of all managed care claims in Florida for a particular dermatological cream in 2018, receiving a total profit margin of over $1.8 million.

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.