Reposted from St. Louis Business Journal
James Drew - January 24, 2025
Missouri Sen. Travis Fitzwater said his bill to rein in the power of pharmacy benefit managers, including St. Louis-based Express Scripts, faces an uphill battle in the General Assembly, even as efforts to regulate the industry at the federal level gets bipartisan support.
“There’s about a snowball’s chance in Hades that this thing goes through as written,” said Fitzwater, a Republican whose district includes Lincoln County and part of St. Charles County.
There will be amendments offered to "water the measure down" and intense lobbying by the insurance and PBM industries to kill it, Fitzwater said. But pushing the legislation – combined with efforts in Congress and potentially the Trump administration to tackle the power of PBMs – is needed to protect consumers and independent pharmacies, he added.
PBMs are companies that negotiate prescription drug prices between insurance companies and pharmaceutical companies. Earlier this month, the Federal Trade Commission released an interim report charging that the middlemen marked up drugs
for cancer, AIDS, multiple sclerosis and other serious maladies sharply over the going rate — as much as a thousand percent in 22%of instances.
Fitzwater said his bill would require reimbursements to all pharmacies to be the same as pharmacies affiliated with PBMs. That change would help independent pharmacies that are struggling — and several are closing — because of lower payments than chain pharmacies, said Fitzwater, a former director of strategic initiatives for the Missouri Pharmacy Association.
The bill also includes provisions aimed at the nation's three largest PBMs — CVSCaremark, OptumRx and Express Scripts — to provide transparency about rebates and fees that they charge drugmakers. The three PBMs administer about 80% of all prescriptions in the U.S., according to the FTC. Express Scripts didn't make an executive available for an interview and didn't respond to requests for comment.
Headquartered in north St. Louis County, Express Scripts was acquired by The Cigna Group (NYSE: CI) in 2018 for $54 billion and is now an affiliate of Cigna subsidiary Evernorth Health Services. Caremark and Optum are affiliates of CVS Health Corp. (NYSE: CVS) and UnitedHealth (NYSE: UNH), respectively.
“They are very anti-competitive,” said Fitzwater. “They are insurance companies that now own PBMs so they can direct their patients to their PBMs, their mail-orders (businesses) or to their approved providers. They are leveraging pharma companies to increase prices.”
Abe Funk, who owns pharmacies in southeast Missouri, said if Fitzwater's bill become law “there will be a loser and it will be the PBMs. But I’m more interested in the patients than them.”
A PBM advocacy group that is fighting Fitzwater’s bill countered his charges and also Funk’s remark. Melodie Shrader, senior vice president of the Pharmaceutical Care Management Association based in Washington, D.C., said the legislation would create mandates on PBMs that would trigger higher costs on Missouri businesses when they contract with insurance companies.
“The way the bill is written, it says anyone can take a prescription anywhere in the state of Missouri and have it filled. Without referencing the terms and conditions of that contract, what you’re really saying is ‘send us a bill.’ That does away with the ability to negotiate contracted rates, which immediately will raise the cost to employers across the state,” she said.
PBMs are vendors for health plans and if the cost of the prescription benefit increases, then the cost will be passed on to employers, Shrader said.
“It’s not the PBM that is going to be a loser. It’s going to be the employers in the state and ultimately the employees. You have to look at the guy or the woman who is sitting at the desk and has to make the decision about how to pay for these
benefits. One of the decisions they could make is ‘we have to carry the cost of this legislation so I could make the benefits less rich. I could increase the co-pay as a business owner. I could increase the amount of premium shared by the employee and the employer,’ ” she said.
Jerry Callahan, owner of pharmacies in Elsberry and Pacific and a supporter of Fitzwater’s bill, said action is needed on the state level and also by the federal government because of the Medicare program. Fitzwater said the Missouri legislature’s ability to “fi x big issues” is limited because of the complexity of the PBM debate. He said he’s pleased that President Donald Trump is “passionate” about the issue.
At a December press conference, Trump criticized PBMs and complained about the high prices of prescription drugs in the U.S.
“We’re going to knock out the middleman. We’re going to get drug costs down
at levels that nobody has ever seen before,” he said.
A federal spending bill in the final weeks of 2024 included provisions to target the rebates that PBMs negotiate with drug companies based on the drugs’ list prices. Critics of the rebates say they provide incentives for higher list prices because PBMs typically offer better formulary placement to drugs with larger rebates, in part because PBMs keep a portion of the rebate as profit, Fortune magazine reported.
Those provisions were removed when Trump and Elon Musk opposed that version of the federal spending bill. A bill introduced by U.S. Sen. Josh Hawley, a Missouri Republican, and U.S. Sen. Elizabeth Warren, a Massachusetts Democrat, is pending.
A spokesperson for the Professional Care Management Association said the Hawley-Warren bill would severely limit access to “safe and affordable pharmacies that patients value and rely on for prescription drugs. The truth is PBM-affiliated pharmacies, including mail-service and specialty pharmacies, have a proven track record of providing convenient, reliable, and affordable options for patients to access prescription drugs,” the advocacy group said in a statement.
Funk, the owner of pharmacies in southeast Missouri, said there is bi-partisan support in Washington, D.C., for regulating PBMs.
“There are very few things that Donald Trump and Joe Biden agree with. There are less things that Josh Hawley and Elizabeth Warren agree with – and this is one of those issues,” said Funk, a member of the Missouri Pharmacy Business Council.