They operate in secret. They have no laboratories or research centers, and produce nothing. But they control a critical intersection of our health care system, influencing the price we pay for prescription drugs and skimming off billions of dollars for themselves.
They are called “pharmacy benefit managers,” or PBMs. From their creation in the 1960s as back-office clerks who shoveled paperwork between insurance companies and pharmacies, today PBMs act like a tollbooth for drug companies seeking access to health plans, providers and patients.
Unlike what a pharmaceutical consultant wrote about benefit managers (“Don’t pass bill that would drive up drug costs,” Viewpoints, Aug. 31), they drive up health care costs by taking massive kickbacks from drug manufacturers – payments the companies recoup with higher prices.
Assemblyman Jim Wood, D-Healdsburg, is trying to bring sunshine to the hidden world of PBMs with Assembly Bill 315, which would require them to register with the state and disclose the rebates and incentives they receive from drug manufacturers.
As a practicing pharmacist with 42 years of professional experience, I can testify to the problems caused by benefit managers. I should be expected to know the wholesale and retail prices of prescription drugs and how they match health plan copayments. But I typically don’t know those numbers until after the final sale has been completed.
The secrecy is intentional. It allows PBMs to quietly determine which drugs qualify for reimbursement. And since three major PBMs dominate the U.S. market, with nearly 80 percent of drug sales, pharmacies, health plans and patients have minimal leverage to bargain for cheaper drug prices or explanations.
With AB 315, California has the chance to shine a light on shadowy PBM practices and regulate a massively profitable industry that’s spun out of control at our expense.
Adrian Wong is an assistant professor of pharmacy practice at Touro University in Vallejo. He can be contacted at Adrian.Wong@tu.edu.