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Work has begun on one of Gov. Ron DeSantis’ priorities for the regular legislative session, due to open in March: constraining pharmacy benefits management companies that control the flow of prescription drugs to individual patients.
A 90-minute hearing by a House committee demonstrated that the job will be a tricky one, given interlocking ownership and business deals between the pharmaceutical companies, national and regional drug store chains, health insurance companies, and independent drug stores.
However, one target did emerge: rebates that drug companies and health plans pay pharmacy benefit managers, or PBMs, to choose their drugs instead of equivalent competitive drugs.
“It seems to create a lot of complexity and heartache for people. Why not just, drug prices are drug prices?” House Health & Human Services committee chairman Randy Fine, a Brevard County Republican, told reporters following the hearing on Tuesday.
“And no one gave a really great explanation as to why these are good ideas,” he said.
No one’s started writing actual legislation yet, Fine added.
“I’m learning. I’m new to this and I’m trying to understand what the problems are and then craft solutions. It’s obviously complicated and there’s a lot of money at stake. But today’s not the day for the solution; today was the day to kick off the conversation.”
The hearing featured presentations from representatives of different actors in the pharmaceutical chain, including an independent pharmacist; PBMs CVS Caremark and Prime Therapeutic; the Pharmaceutical Research and Manufacturers of America (PhRMA); the Florida Association of Health Plans; and Publix Super Markets, which runs a regional chain of in-store pharmacies in Florida and other southeastern states.
The Florida effort is part of a national reconsideration of the power of these benefit managers, including antitrust scrutiny by the Federal Trade Commission, as reported by Phoenix affiliate Ohio Capital Journal. The suspicion is that “vertical integration” — through which PBMs own insurance companies and even physician practices — is driving drug prices upward.
“So increasingly, Americans are getting a prescription from a doctor, filling it at a pharmacy, and having the transaction administered by a PBM, all the while working with the same corporation,” the Capital Journal reported in September.
In Tallahassee, committee members learned that three PBMs control 80 percent of the market: CVS Caremark (33%), and Express Scrips (26%), and OptumRx (21%), according to Becker’s Hospital Review. (Prime Therapeutics controls 4%.)
Manufacturers made “price concessions” to PBMs worth $204 billion during 2021, according to PhRMA representative Kristin Parde.
Publix’s Katie Scanlan complained the chain has been blocked from doing business with large PBMs notwithstanding its heft within its regional market. Access is even more difficult for independent drug stores, said Kevin Duane, who runs Panama Pharmacy in Jacksonville.
Patient care can suffer. The Columbus (Ohio) Dispatch identified cases in which patients were denied immediate over-the-counter access to needed drugs in favor of PBM-owned mail-order dispensaries that sometimes took weeks to deliver. Two patients died, the newspaper reported.
Prime Therapeutics’ Johnny Garcia defended the system as a means to lower prices; those rebates, he said, amount to “voluntary discounts.”
But they don’t always reach individual consumers, and the industry is marked by interlocking corporate connections between insurers and benefits managers, like Cigna and Express Scrips.
Republican Chuck Clemons, representing Gilchrist, Levy, and part of Alachua counties, compared the industry to “the layers of an onion — the closer you get to the core, the more tears are shed. Could be tears of joy, could be tears of pain,” he said.
He also compared it to “The Wizard of Oz.”
“If three PBMs control 80 percent of the market, how is anyone ever supposed to pierce that veil to get into the Land of Oz so that the patient can get drugs or pharmaceuticals or prescriptions that are lower [in price]?” he asked at one point.
“When people start asking questions, then the big buyers, they’ll come down and they say, ‘Don’t pay attention to the little guy behind the curtain.’ We’re just trying to find the little guy behind the curtain.”
Republican Michelle Salzman of Escambia County picked up on that point.
“The companies own the companies that own the companies that control states within those companies. How do we have a free market; how do we have freedom in Florida if we’re bound to contracts and people there that have names upon names and companies upon companies? And even people that are supposed to be well-versed on this topic are still confused,” she wondered.
During a news conference on Jan. 12, DeSantis called for legislation requiring PBMs to disclose affiliated organizations and any complaints or settlement agreements they’ve drawn or entered into. He wants oversight by the Florida Office of Insurance Regulation, too.
As for manufacturers, DeSantis wants to force them to disclose proposed price increases and file annual report justifying them.
Lower drug prices has been a DeSantis goal for years but an area where he has met with frustration; having persuaded the Legislature to allow state agencies to import cheaper pharmaceuticals, he’s been unable to persuade the Biden administration to cooperate. The state sued the federal government last year seeking to begin those imports (which the Canadian government also opposes).
Following the hearing, a reporter asked Duane about the system’s complexity; did he think it was designed to be confusing?
“Yes, I would say. If I was a bad actor and wanted to do it that way that’s probably how I would do it. I would make it intentionally confusing so that it’s hard for people to deconstruct,” he replied.
CVS later released a written statement.
“Big drug companies have raised prices on nearly 600 drugs this month. As lawmakers seek to tackle the issue of prescription drug affordability during the upcoming legislative session, we urge them to focus on these high and rising prices and reject policies that will further raise costs for patients, working families and small businesses,” it reads.
“We are proud of our work on behalf of the millions of Floridians we serve, providing a pharmacy benefit that controls costs and secures access to the medication they need to improve their health.”
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