RENTON, Wash — Many frustrated pharmacists in Washington are feeling validated this week after a new analysis was released, suggesting the industry's third-party drug negotiators are ripping off employer healthcare plans and choking out local pharmacies.
Brick-and-mortar pharmacies in Washington are struggling. According to the Washington State Pharmacies Association, 83 community pharmacies have closed in Washington since 2023.
Its CEO, Dr. Jenny Arnold, said, "It's bad for patients. It's bad for employers, it's bad for healthcare providers."
Her association is now armed with new information. A first-of-its-kind study she commissioned via 3 Axis Advisors confirms what many pharmacists suspected all along: that most mail-order pharmacies are putting local ones out of business.
"This study proves what pharmacies have been telling me for years," said Arnold.
People insured by healthcare coverage have what is called a "pharmacy-benefit manager," or PBM. Examples include Cigna's ExpressScripts, UnitedHealth's Optum RX, or CVS Health's CVS Caremark.
Historically, PBMs played a vital role in negotiating claims between a pharmacy and an insurance carrier. But now, the new study shows that in many cases, PBMs are negotiating marked-up prices for medications and steering patients to affiliated mail-order pharmacies instead of local ones.
According to the report, PBM-affiliated mail-order pharmacies' drug markups are more than three times the markups at local brick-and-mortar pharmacies.
The report also found that while Washington employers' plan costs increased by 30%, pharmacy reimbursement actually decreased. It's the PBMs who are pocketing the difference.
"Skyrocketing prices," said Arnold. "Employers are being ripped off by pharmacy-benefit managers."
Arnold said PBMs need more oversight and regulations because they are becoming too powerful and often avoid transparency.
"Really owning the health carriers, owning the pharmacies, owning the mail order pharmacies, now owning clinics, and this huge amount of vertical integration," Arnold said. "We need comprehensive reform in this space."
KING 5 asked, "Why hasn't there been a study like this ever?"
Arnold replied, "Because it's difficult to get this data from employers."
Arnold said PBMs' major influence over the industry is leading to anti-competitive behaviors.
She said one example of those behaviors is the phone calls patients are receiving from PBMs seeking to sign them up for a mail-order prescription from out-of-state pharmacies.
"We're hoping that the results of this study lead to Department of Justice investigations," Arnold said.
While PBM-affiliated mail-order pharmacies may claim to keep your drug costs down, the new research shows otherwise.
"We'll be working to educate employers," she said. "I would say that you need to ask more questions of your health benefit broker: 'What sort of pharmacy-benefit manager are they working with?'"
Two summers ago, Attorney General Bob Ferguson found that the PBM for healthcare giant Centene illegally overcharged Washington Medicaid. They were ordered to pay $19 million, which is among the largest Medicaid fraud-recovery payments in Washington's history.