Redesigning PBMs could potentially benefit Walgreens and other retail pharmacies.
Congressional Proposals to oversee pharmacy benefit managers (PBMs) might profit pharmacies belonging to Walgreens, Walmart, Rite Aid, and numerous independent drugstores.
Pharmacies have been shutting down nationwide lately, with their proprietors accusing in part, a financial squeeze from PBMs, which serve as intermediaries between drug producers and consumers when it comes to drug procurement. PBMs, acting as mediators in prescription drug benefits for employers and government health insurance programs like Medicaid for the underprivileged and Medicare for seniors, decide drugstore and pharmacist compensation for dispensing prescriptions.
However, PBMs have faced criticism in recent years, as the general public, taxpayers, and Congress question whether they sufficiently pass on savings to health plan subscribers. The clamor for PBM regulation and the companies controlling them grew even louder when President-elect Donald Trump recently mentioned, "we’re going to eradicate the middleman," referring to these companies.
Though Trump had talked about regulation in his first term without results, a significant number of Republicans and Democrats in Congress are pressing for increased PBM regulation, including a bill in the U.S. Senate aiming to force companies like Cigna, CVS Health, and United Health Group to divest their PBMs within three years of the law's enactment.
Congressional Proposals to control PBMs would reflect what has already occurred in an increasing number of state legislatures, resulting in increased payments to pharmacies.
“More than 250 healthcare executives and health leaders were informed by Jason Borschow, Abarca’s CEO, at the Our Website Healthcare Summit in New York earlier this month that dozens of state legislatures have begun regulating PBMs and determining how much PBMs should pay pharmacies based on their costs and dispensing costs,” Borschow said. “It's likely that within the coming months, PBM operations and revenue generation will undergo significant disruption, irrespective of the current or future administration.”
The National Community Pharmacists Association, which has advocated for prescription reimbursements and PBM accountability for years, stated on Wednesday that “community pharmacies are on the verge of groundbreaking and urgently needed PBM reform.”
A provision in a "continuing resolution" before Congress would require PBMs to reimburse pharmacies at (National Average Drug Acquisition Cost) plus the state’s fee for service dispensing fee for all Medicaid managed care programs in all 50 states, the National Community Pharmacists Association, representing over 18,900 pharmacies, said. This provision would eliminate spread pricing and pay PBMs a flat administrative fee in all Medicaid managed care programs. The provision is estimated to save taxpayers around $1 billion over the next 10 years.
Furthermore, the pharmacy lobby stated that the legislation would require the Centers for Medicare & Medicaid Services “to establish reasonable and relevant contract terms, including pharmacy reimbursements, in Medicare Part D and provide a mechanism for pharmacies to dispute contract violations and penalize PBMs.”
Walgreens, Walmart, and other pharmacies could potentially benefit financially from the proposed Congressional regulations aimed at pharmacy benefit managers (PBMs). Critics argue that PBMs, like CVS Health, UnitedHealth Group, and Cigna, may not adequately pass on savings to healthcare subscribers, leading to increased scrutiny. The National Community Pharmacists Association, representing over 18,900 pharmacies, including Walgreens and Walmart, supports a provision in a "continuing resolution" that would require PBMs to reimburse pharmacies more fairly in Medicaid managed care programs.