Unfair Pharmacy Benefit Practices Raise Medicine Costs for Californians

By Rodney G. Hood

The cost of living in San Diego continues to go up, and expenses like rent, food and transportation can make existing day to day a struggle for many San Diegans. For those with chronic health conditions, the medication costs associated with managing their conditions can make matters worse. Unfortunately, some Californians are paying even more than they have to because of a lack of transparency around little-known middlemen called pharmacy benefit managers.

PBMs, as they are known, are middlemen who are hired by insurance companies to administer the pharmacy portion of a patient’s health insurance. PBMs negotiate contracts with insurers, pharmaceutical manufacturers and pharmacies including which drugs will be covered on the patient’s plan, what the patient will pay, and what the pharmacy will be reimbursed.

There is both a lack of transparency and a lack of government oversight around PBM practices, which are driving up costs for consumers. One such practice is a “gag clause,” which prohibits pharmacists from telling consumers when it would be cheaper to pay out-of-pocket for a medication, rather than going through insurance. Another is when the copay that a consumer must pay for the medication is greater than the retail cost of the drug. Rather than passing those savings onto consumers, PBMs “claw back” the savings for themselves.