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Bills take aim at 'unregulated middleman' in prescription drug costs


Concerns about the business practices of pharmacy benefit managers has reached "the boiling point," said Sen. Greg McCortney, author of a bill to change how those entities operate in Oklahoma.

"More than anything it's the lack of transparency inside that industry," McCortney, R-Ada, said. “They’ve absolutely been able to thrive working in the dark for a long time.”

A pharmacy benefit manager (PBM) is a third party that negotiates with drug manufacturers on behalf of health plans. PBMs help insurers decide which drugs to cover and contract with pharmacies to distribute the medications.

The largest PBMs — OptumRx, Express Scripts and CVS Caremark — dominate the industry.

Senate Bill 841 would give patients the right to choose a pharmacy provider.

"Being able to walk in and talk to a pharmacist and get your questions answered helps in so many ways. This bill gives people the access to do that again," McCortney said.

The Oklahoma Pharmacists Association, pharmacists across the state and multiple local chambers are endorsing the bill.

"These are pharmacy-choice bills,"said Nick Curtin, pharmacist and owner of Curtin Drug in Glenpool. "No more requiring you to drive past the pharmacy of your choice to a large chain pharmacy."

Curtin said PBM representatives are in Oklahoma, stirring up fear that SB 941 and House Bill 2632, which also addresses the issue, will increase costs and premiums.

"That's simply not true. Several other states have passed similar laws and not seen these increases," Curtin said.

Oklahoma's bills passed unanimously in the House and Senate and were forwarded to the opposite body.

McCortney said more than 190 bills addressing the PBM issue are in play across the country.

"This is not just Oklahoma, this is pretty much every state in the Union," he said. “It’s a very fast-growing problem."

President Donald Trump also is championing change, giving the issue more political momentum in some states.

“He is leading the way on the federal level to try to fix this," McCortney said.

The State Chamber opposes the two Oklahoma bills.

The bills "would increase Oklahomans' prescription drug costs and limit the tools available to business to contain costs," said Fred Morgan, the state chamber's CEO.

In columns and materials opposing the bills, the chamber notes the House's financial analysis of HB 2632 shows the cost to the state is estimated to be $5 million annually.

The chamber also points to a February 2016 report by Visante, a consulting firm specializing in the pharmacy industry and healthcare compliance, that projects PBMs will save employers in Oklahoma about $7.5 billion over 10 years.

The cost of many commonly used drugs is increasing at a rate of 12 percent annually, which is a serious problem for employers and their employees, Morgan said.

“Usually the State Chamber represents the smaller chambers, but on this issue there’s division for sure," McCortney said.

He agrees prices continue to rise, but said the additional money isn't going to pharmacies or to drug companies; it's going to the PBMs.

“That industry is booming and that is where a large part of the increase in drug costs comes from. This unregulated middle man works in a world with very little transparency," McCortney said.

PBMs require pharmacists to charge the customer the insurance plan copay, even if the drug didn't cost the pharmacy that much, McCorntey said. Gag clauses prohibit the pharmacist from telling customers they could get the drug for less if they paid cash instead of using insurance.

The money above cost goes either to the PBM or the insurance company as a "backdoor premium," McCortney said.

A pharmacist in his district told him he was forced to sell some medicines at a loss. Others said their employees must get their prescriptions filled from a competitor to use their insurance coverage.


Pharmacy benefit managers are big businesses. The companies negotiate with drug manufacturers on behalf of government health plans and private and employer-based insurance plans. The deals they strike determine the availability and prices of prescription drugs for more than 266 million Americans.

In addition to negotiating with drugmakers for discounts and rebates, the PBMs help insurers decide which drugs to cover. They also contract with pharmacies to distribute the medications and handle payments.

The largest PBMs — OptumRx, Express Scripts and CVS Caremark — dominate the industry.

SOURCE: The Pew Charitable Trusts

K.S. McNutt

Kathryn McNutt covers higher education for The Oklahoman and NewsOK. Since joining the staff in August 2000, she also has worked as the Breaking News editor, Metro editor and assistant Local editor. A native of Oklahoma City, she graduated from... Read more ›