By Mark H. Stowers
The Mississippi House of Representatives passed a bill last Thursday that is aiming to increase pharmacy benefit managers’ (PBM) transparency by requiring them to report data to the agency that oversees pharmacy practice in Mississippi.
The bill, now in the Senate, was authored by House Speaker Jason White. In a Mississippi Today story, White said the bill was a “good first step” intended to give the Board of Pharmacy, along with the public, awareness of PBMs’ business practices so they are compliant with state law.
That bill would only be a small band-aid on a gaping wound for the 380 independent pharmacies across the Magnolia State. The cost of doing business for independent pharmacies is a tough row to hoe.
The problem is the third-party companies that manage prescription drug coverage for health insurance plans.
These middlemen buy drugs from large suppliers (while negotiating their own discounts and rebates) and then sell to the pharmacies with little or no relief. Pharmacies are stuck with the non-negotiable contract all while working to get their own reimbursements from insurance companies.
PBMs act as middlemen between insurance agencies, companies that pay for employee health plans and pharmacies – in exchange for facilitation fees. They also regulate and control what drugs are on a list of insurance-covered products within a plan sponsor’s health network, the co-pays for patients at different pharmacies, and reimbursements to pharmacists for selling the drugs.
The three largest PBMs in the U.S. are CVS/Caremark, ExpressScripts and OptumRx. Their money-making process includes receiving rebates and discounts from drug manufacturers to approve products, as well as paying pharmacies less than what they charge employers and insurers. They also claw back reimbursements to pharmacies for breaking the terms of a contract. And one of those PBMs was found to be reimbursing some pharmacies more than others in Mississippi – the ones they own, according to a recent audit.
The Mississippi Board of Pharmacy issued an October, 2024, audit identifying 75,462 instances where OptumRx paid independent and chain pharmacies less than any of their affiliated pharmacies’ lowest reimbursement for a prescription during a 2022 study period. For one specific drug, the difference between the reimbursement for a PBM-affiliated pharmacy and an independent one was 2,150%.
Indianola’s Magic Mart owner Guy Phillips is responsible in part for 11 of those. He takes care of the pharmacy needs of about 30,000 folks through those nearly a dozen independent pharmacies.
“In some cases, I’m buying a $1,000 drug and only getting $900 back in reimbursement,” Phillips explained.
The Legislature has been fielding bills for the past four years, according to Phillips, but without much success or help for independent pharmacies. A current bill has passed the House but is only a start.
“In its current form, the bill is not really going to help an independent pharmacy,” Phillips said. “I don't like acting like we're always whining about everything, but it's not what we want. It's not what we're open for.”
He did note the bill “lends more toward the Board of Pharmacy getting some regulations they need and some teeth that they need to be able to reel in the PBMs and do some things, which in the long run may help us, but it's not immediate for us and that's why everybody's kind of up in arms a little bit. We're just a little bit frustrated. But I understand that sometimes it takes baby steps. I can't get it all in one time.”
Phillips explained that more education is needed from the Pharmacy Board to businesses that choose what PBM directs their pharmacy coverage.
“The PBM needs reforming, needs changing, needs to be more transparent. And I think one of the bigger hurdles we're at right now is the larger employer groups, the business groups, the owners, the bankers, the big corporations that rely on these PBMs for their prescription benefits. We really haven't done a good job of educating them. I think the only side of the story they're getting are from the PBMs.”
He noted there are smaller PBMs that are more regional and “not the big billion-dollar conglomerates. And they're doing a better job of a true administrator versus somebody that gets involved in the drugs and makes money off all that. There's companies out there that will actually administer a plan for a flat fee. They're not involved in anything else. So, they charge you per transaction. And that's a reasonable thing to do to administer a drug plan. They have a fair reimbursement to the pharmacy and they have comparable formularies and everything's good. We just have to get more of those companies in front of these employers and give them better options so that they can see there's possibly a better route out there.”
He noted that most businesses offering health benefits are comfortable with their choices and aren’t aware of anything better.
“They just quit looking.”
In looking more closely at the larger PBMs, Phillips explained, “They're double-dipping. They're squeezing me to a point where they're not even covering my costs. They're turning around and charging the payer, the employer, or the plan, double, and they're making all the money in between. It's insane. And they're getting rebates from the manufacturers. They're doing all kinds of monkey business. But they have a great lobby group. They have a lot of money so they can get their narrative out there and continue to push it and press it and make it the truth, whether it's the truth or not.”
Educating local employers would help start to turn the tide before Mississippi’s independent pharmacies go belly up under the current set up.
“I just feel like the employers, especially small employers, like medium-range employers in the Delta like Planters Bank. They are a pretty big operation. Are they getting the best deal? You think about Wade Implement. They're pretty big corporations as far as we're concerned. I feel there's better options for them out there. They’re just not picking from them. That's just an education process.”
With the Delta’s population trending downward, large chain pharmacies aren’t coming and if reform doesn’t come, more independents will close up shop creating pharmacy desserts and forcing patients to travel further, costing them more money that they don’t have.
“If we shut down, that's 30,000 people that have got to find somewhere else to get their pharmacy prescriptions from. And that's just me – a small group in the Delta. When you multiply that out, it gets pretty…, it's a big number.”
The reform marathon continues with one tiny step by the Mississippi House.
