By Consumers for Quality Care, on December 20, 2023
In Ohio, Democrats and Republicans have found something that they can agree on. The largely Democratic city of Cleveland and the state’s Republican Attorney General are joining forces in a lawsuit against some of the largest pharmacy benefit managers (PBMs) in the country. They allege that these PBMs use anticompetitive business practices that force independent pharmacies out of business while also causing prescription drug prices to rise, according to News 5.
Michael Moawad, who owned a small pharmacy in rural Ohio, was forced to close his business, even though it was growing. According to Moawad, the fees demanded by PBMs were prohibitively high, and on top of this, it was impossible to calculate beforehand exactly how much he would owe. Additionally, the fees would come due at unpredictable times, making it difficult for him to run his business. “They increased it [the fees] so much,” said Moawad. “The last quarter I paid $50,000. The one before that was only $30,000. I don’t know why $30,000. I don’t know why $50,000. I don’t know if the next one will be $100,000. So how are you going to make a business decision? It’s impossible. You’re supposed to be buying the product, selling it to the customer and profit. But if you’re buying and then selling the product and lose, you can’t survive.”
Three of the largest PBMs – Optum, Express Scripts, and CVS Caremark – are owned by some of the largest health insurance and pharmacy companies in America. The problem is that these are the very companies that PBMs are supposed to be negotiating with. The apparent conflict of interest – one in which big pharmacies and insurance companies are essentially negotiating with themselves – forms the basis of the lawsuit. According to Mark Griffin, the Law Director for the City of Cleveland, “pharmacy managers are supposed to be protecting us but often times they work for themselves.”
Additionally, it is alleged that PBMs use their market power to steer consumers away from smaller, independent pharmacies and toward those owned by their parent companies. Ohio Attorney General Dave Yost described PBMs as having “gotten their tentacles so deeply into the formularies and the payment process and they’re using it for their own self interest.” This is the fourth lawsuit that Yost has filed against the PBM industry. He hopes these lawsuits will “forever change the way PBMs are interacting in the pharmacy space, how they treat the pharmacies, how they interact with the insurance companies, how they treat us and most of all, what they do to the price of prescriptions.”
CQC urges lawmakers and regulators to continue to scrutinize PBM practices that increase the cost of prescription medications for consumers.