California AG Rob Bonta urges Congress to ban ‘middlemen’ from owning pharmacies
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BONTA: BAN CVS CAREMARK, OTHERS FROM OWNING PHARMACIES
A bipartisan group of attorneys general has asked Congress to rein in the activities of Pharmacy Benefit Managers, middlemen of the pharmaceutical industry that leaders from across the aisle blame in part for high prescription drug prices.
Attorney General Rob Bonta, one of dozens of states’ attorneys general to sign onto the letter, said federal law should prohibit PBMs and their parent companies from operating or owning pharmacies.
PBMs negotiate with pharmaceutical manufacturers, help determine what medication patients get and pay pharmacies. These intermediaries, which were originally created to help Americans access cheaper prescription drugs, have consolidated the industry and used that influence to increase prices of medication, the attorneys general said.
“Drug prices have skyrocketed in recent years, and PBMs have exacerbated the problem,” Bonta said in a statement. “To protect consumers and small businesses, we need more competition — not less — in the marketplace.”
A New York Times investigation into the opaque industry found that PBMs push customers to take more expensive medications when cheaper alternatives are available. The investigation found these companies have pushed independent pharmacies out of business.
“Over the past few decades, horizontal consolidation and vertical integration have transformed PBMs from useful administrative service providers into market-dominating behemoths that control the industry,” the attorneys general wrote.
The attorneys general said 80% of the country’s prescriptions are handled by three companies: CVS Caremark, Optum Rx and Express Scripts. The largest six PBMs operate their own affiliated pharmacies and many are part of larger conglomerates that run health care clinics and insurance companies, the letter said. The attorneys general asserted PBMs have used manufacturer rebates to increase medication costs.
Congress has previously attempted to reform the controversial middlemen of the prescription drug market. Last year, federal lawmakers proposed legislation that would have increased transparency in the pharmaceutical industry, but those measures were removed from the government funding package that was passed in December. President Donald Trump has previously criticized middlemen for increasing the cost of drugs.
That was disputed by CVS Caremark spokesperson Phillip Blando.
“Here’s a reminder of market realities: CVS Caremark does not set the price of drugs, and rebates do not increase the cost of drugs,” Blando said in a statement. “CVS Caremark also pays other pharmacies more than it does CVS Pharmacy. Today’s AG letter ignores facts, and suggests solutions that do nothing but push an anti-consumer agenda.”
Blando said lawmakers hindering PBMs’ work would make health care more challenging and more expensive for patients. Blando said CVS pharmacies are owned by parent company CVS Health, not CVS Caremark.
CALTRANS DIRECTOR TO RETIRE
After three and a half decades of state service, California Department of Transportation Director Tony Tavares announced he will step down early next month.
Tavares did not state the reason for his retirement in his letter to the department, but he thanked Caltrans employees for their public service. Gov. Gavin Newsom appointed Tavares as Caltrans’ director in June 2022, according to the director’s executive biography.
“Together, we’ve built and maintained more than just highways, bridges, and transit systems — we’ve connected communities, supported economic growth, responded to emergencies, and helped move California forward through times of challenge and transformation,” Tavares wrote in an email to employees.
Between 2010 and 2018, Tavares worked as Caltrans’ statewide division chief for maintenance. Before he was appointed as Caltrans’ director, Tavares served in district director roles in both the Bay Area and the Los Angeles/Ventura counties region, according to Tavares’ LinkedIn profile. Previously, Tavares worked as a civil engineer for the state.
A spokesperson for the governor’s office said they are working with the California State Transportation Agency and Caltrans teams to ensure a smooth transition.
QUOTE OF THE DAY
“The government should not be able to falsely accuse individuals in the United States, including U.S. citizens, of gang membership and send them to foreign prisons without any judicial review or remedy.”
— A group of U.S. lawmakers, including Sen. Alex Padilla (D-Calif.), in a letter to President Donald Trump, alleging he unlawfully invoked the Alien Enemies Act of 1798 and deported noncitizens without any due process.
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