A correction has been added to this commentary.

IT SEEMS THAT every year we pay more for our health insurance premiums yet get less coverage. Time after time, customers come to our pharmacies to pick up a prescription and lament the increased costs of insurance premiums, copays, and co-insurance required by their insurers and pharmacy benefit managers, or PBMs. They tell us they’ve had to choose higher deductible plans just to “afford” insurance.

Over the last few years, Massachusetts legislators have proposed several bills to rein in healthcare costs trying to get to the bottom of why prices are increasing. They need to focus on PBMs–the middlemen between insurers, drug companies, and consumers. 

PBMs negotiate prices of drugs with manufacturers, decide which drugs an insurer will cover, hide the negotiated price from the insurer, and don’t pass along the discounts to patients as was intended when they first came into play. Multiple studies and reports over the last several years show how PBMs have fattened their pockets on the backs of vulnerable patients and taxpayers, as they and their insurers charged as much as 27.4 times more for a medicine than what the manufacturers charge.   

They’ve implemented sly tactics such as copay accumulator programs, which take copay assistance, given to patients by third parties to help offset out of-pocket costs such as deductibles, and kept that money for themselves while still charging the patient the full deductible. It’s thievery. The insurer gets paid twice, the patient gets nothing, and the pharmacist is the one who must be the bearer of that bad news.

And PBMs threaten the viability of independent pharmacies on several levels. A 2021 study commissioned by the Massachusetts Independent Pharmacists Association found pharmacy benefit managers charged insurers $4.06 more per prescription than they paid the pharmacy.  They pay pharmacies less than the acquisition cost for a medication, steer consumers to corporate pharmacies they own, and charge insurers inflated prices.  This has caused hundreds of community pharmacies to close.   

A report released just this month found PBMs are responsible for setting the prices for most of the drugs patients pay for at the pharmacy, adding “generic drug prices were highly variable and disconnected from the manufacturer or pharmacy established price for the medication.” The study concluded patients are harmed the most by PBM price-setting. [CORRECTION: The original version of this story had the wrong link for the report.]

Unfortunately, none of this is new or surprising. Four years ago, the Massachusetts Health Policy Commission came to the same conclusion.

Making matters worse, the three largest PBMs, which are owned by large insurers, control 80 percent of the market. They were created with the intention they would negotiate discounts and pass them on to patients. Instead, they’ve taken advantage of not being regulated using several tactics to reap profits, sometimes in the billions.

And it’s not just happening in the private insurance market. As I’ve written about before, taxpayers, whether we’re on medications or not, are also victims of PBM price gouging.  The Government Accountability Office found Medicare patients paid four times the amount that insurers were charged for the medication.  In Massachusetts, data has shown PBMs underpay pharmacies and overcharge insurers, resulting in inflated drug costs. It’s called spread pricing.  Insurers are willing participants because this reduces administrative fees, makes them appear more efficient, and justifies increasing premiums.  Pharmacies lose because the reimbursement is unsustainable, and all of us are forced to pay more for insurance than we should. 

Clearly, the system is broken, allowing for manipulation that results in grossly inflated prices.   

Despite all this, the Massachusetts Legislature has failed to take action to address these issues. Over the last few years, legislation has been proposed but not passed. 

There’s no more time to delay. In this year’s health cost trends report, members of the Health Policy Commission said pharmacy benefit managers are increasingly responsible for inflating the costs of drugs and require further scrutiny. 

It’s important to remember that for many underserved communities, their independent pharmacist is their only touchpoint for healthcare. If these pharmacies close because of PBM tactics, health care equity will be more on the line than it even is now.

As lawmakers, again, hold hearings on bills to bring PBMs into line, it’s my hope they will act, for the sake of their constituents.

It boils down to this: PBMs remain unregulated and until they are regulated consumers will continue to pay unfair, highly inflated prices for their life-saving medications, and taxpayers will continue to pay for PBMs to make billions.

Todd Brown is the executive director of the Massachusetts Independent Pharmacy Association, which is part of a coalition seeking tougher regulations of pharmacy benefit managers.