Kudos to the Texas Legislature for their decisive actions this session to rein in pharmacy benefit managers (PBMs).
Pharmacies statewide worked closely with lawmakers to pass House Bills 1763 and 1919, two measures that preserve patients’ access to affordable, life-saving drugs while protecting small pharmacies from the PBM overreach that threatens their businesses.
For too long, the lack of transparency in PBM operations has enabled them to drive up medication costs while stifling competition in the retail pharmacy space. But lawmakers showed that they have come to understand PBM practices and have now taken significant steps to curb their domination of prescription drug benefits. They made a strong statement with their 177-0 vote to approve HB 1763, which prohibits retroactive cuts in pharmacy reimbursements, protects pharmacies’ ability to mail and deliver mediations to their patients and prohibits PBMs from paying their affiliated pharmacies more than they reimburse other pharmacies for the same drugs or services. HB 1919 prohibits self-dealing PBM practices that steer pharmacy patients toward PBM-owned pharmacies and use patient-identifiable data to drive their pharmacy marketing efforts. The passage of these two vital bills is strong testimony for the commitment of our Legislature to the welfare of Texans pharmacies and the patients they serve.
PBMs are shadowy middlemen that control more than 80% of the nation’s drug benefits. They have an outsized influence on insurers, big employers, pharmacies and their patients. They determine which medications are covered by an insurance plan and which pharmacies can participate in provider networks. They set prices and determine patient costs and co-pays. At the same time, they operate their own retail and mail-order pharmacies that compete directly with chain and independent locations. They use their power over pharmacy networks to steer patients away from community pharmacies to their own affiliated operations. This steering not only drives patients away from local pharmacies – which already are struggling – but also makes medication access less convenient for patients.
On top of all of this, PBMs control reimbursements from insurance plans to pharmacies. They have steadily decreased payments to community pharmacies to the point that reimbursements are now often less than the pharmacy’s acquisition cost for medications. They also pay their own affiliated pharmacies more for the medications they dispense than they pay other pharmacies for the same drugs, driving up costs for plan payers.
Because PBMs have the upper hand over small pharmacies, they often force these businesses into “take it or leave it” contracts. Pharmacies largely have no flexibility, no bargaining power, and cannot stand up for themselves and their customers – even with pharmacy services administrative organizations (PSAOs) advocating on their behalf. The fact is, PBMs are Fortune 50 companies whose wealth and power has grown exponentially with their control over prescription drug benefits. They have prioritized profits and growing their own pharmacy operations over the needs of the plan payers and patients they are charged with serving. As locally owned businesses, our state’s small pharmacies are deeply invested in the health and welfare of the communities they serve. Serving patients is always priority one, as their dedication in maintaining operations and vaccinating thousands of Texans during the COVID pandemic has shown.
By signing House Bill 1763 into law and allowing HB 1919 to be enacted, Governor Abbott has shown he shares our commitment to protecting patient access to affordable medications and ensuring a fair, level playing field for Texas community pharmacies. With these landmark bills, Texas has taken steps to preserve the vital role that our local pharmacies play in caring for their communities.
Michael Wright is vice president of government affairs for the Texas-based American Pharmacies purchasing cooperative and executive director of the Texas Pharmacy Business Council.
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