Independent pharmacists blame ‘medical middlemen’ for soaring drug costs, pharmacy closures

NEW ORLEANS (WVUE) - If you have trouble affording prescription drugs, some independent pharmacists say that so-called pharmacy middlemen are partially to blame.

A handful of pharmacy benefit management companies, or PBMs, are being sued for running up the price on certain prescription medications. The PBMs also are the source of increasing financial stress for many independent pharmacies around the U.S.

Stephen Caillouet is a customer at a small pharmacy in the bayou region of Louisiana. He chooses Willow Bark Pharmacy, because it's close to his home and he's able to get his prescription quickly. One particular drug is critical to his health.

"Eliquis, it's a blood thinner," he said. "You take it once in the morning, once in the evening and if you stop taking it, you might die. It's very important."

Caillouet says it's also very expensive. He's retired and on a fixed income. Why the price of the drug fluctuates is a mystery to him.

"From January to July, it's $45. From July to December, it's $145," Caillouet said. "I can't afford that. But I got to do what I got to do."

He has company. According to a recent poll by the Kaiser Family Foundation, one in four adults on prescription medications has trouble paying for them. What they might not know is how pharmacy benefit managers - the PBMs - fit into the pricing picture.

PBMs essentially are middlemen, operating between drug makers, pharmacies and health insurers who set the prices patients pay. That's done through things like co-pays and deductibles.

Insurance companies hire PBMs to manage the pharmacy or prescription portion of health plans. They act like gatekeepers, negotiating drug prices and creating lists of which brands will be covered. If you have health insurance, your provider likely partners with a PBM or, in some cases, owns their own PBM.

CVS Caremark, Express Scripts and Optum Rx are considered the top three PBMs in the US. They manage almost 80 percent of prescription drug claims for about 270 million people. To better understand how a PBM can influence drug costs, we visited two independent pharmacies in the New Orleans metro area.

"It's basically a middleman," said Ella Vasquez, owner of DBS Pharmacy in Metairie. "It dictates what the consumer pays and what they pay the pharmacy. They're the ones that are dictating how much we get paid, and most of the time they pay underwater, which is below our cost of acquisition."

Minh Nguyen owns Willow Bark pharmacy in Chackbay, a small town in Lafourche parish. Nguyen says that through a rigged list of preferred drugs called a formulary, PBMs control the price of many prescription drugs.

"They promise you that they're saving you money, that the cost of healthcare is going down. But instead, you see the opposite. Premiums go up, benefits go down, you're getting less coverage on your insurance for a higher premium," Nguyen said.

"Every year, it's a pay-to-play to be on their formulary. So, whatever drug companies pay the PBM the most rebate money, they get to be on that list. So, if your doctor prescribes you a certain drug and if it's not on that preferred list, it'll probably be impossible for you to get the drug you want. You have to use one of the drugs that's on the list."

Those drugs, according to Nguyen, are often more expensive brand names instead of less expensive generics. For Alida Olson, the PBM on her health insurance changed the price of her daughter's prescription. Olson says she used to pay $35 for it.

"I used to be able to get it for that price. But if I wanted to fill 90 days or a further prescription, they want me to go to a larger pharmacy or mail order," Olson said. "I can't get a recurring prescription anymore. They put restrictions on those recurring prescriptions. Then, what they did was they took that medication off of our preferred list. So, in the end, I was doing mail order. And that 90-day prescription that used to be $35 with mail order was brought up to $75."

Olson lives in Metairie. She said she wants her prescriptions filled by her local pharmacist, not by mail order.

"I prefer to come to DBS Pharmacy, because I can have a conversation with a pharmacist," Olson said. "She takes time to listen to the needs of myself and my family."

Vasquez says PBMs are crushing independent pharmacies, by steering people to pharmacies, mail-order dispensaries and list of brand-name drugs the PBMs prefer.

"We are like David fighting a big Goliath," Vasquez said. "A lot of people think the pharmacy makes money to dispense expensive medicine. But it's actually the opposite." She said every independent pharmacy is "in the same boat."

Nguyen said, "It's not about patient care, it's about money for them. It is pure greed is what it is."

Nguyen has been running his Chackbay pharmacy for seven years and says PBMs are making it harder on him to make a profit and to stay in business. He said he fears that one day soon he might have to close his doors permanently, which would leave a huge void in the small community.

"The experts call that a pharmacy desert. That means the access to care disappears," Nguyen said. "Patients will have a tougher time getting from Point A to Point B, and because they'll have to go from their home to get their prescriptions."

PBMs have been operating since the 1950s, but only recently have their practices come under scrutiny and faced litigation. In March 2023, former Louisiana Attorney General Jeff Landry sued three drug makers and the three biggest PBMs (Caremark, Optum Rx, Express Scripts), accusing them of inflating insulin prices for claims made through Louisiana Medicaid.

"Back in the 1990s, diabetics in Louisiana could purchase a vial of insulin for around $20. Today, that same vial costs over $300," Landry said at a news conference in 2023.

That lawsuit is ongoing. In September of this year, the Federal Trade Commission filed a similar lawsuit against the three largest PBMs, alleging they used a "perverse drug rebate system" that forced patients to pay more for life-saving insulin while making millions of dollars in profits.

"These are giant corporate middlemen, who are exercising an enormous amount of power over how much Americans are paying for critical medication, which pharmacies they can go to, how much they will pay, how much the pharmacies will make," said Hannah Garden-Monheit, director of the Office of Policy and Planning at the Federal Trade Commission. "And we are quite concerned that these middlemen are using their power to make more and more for themselves, even as patients pay more."

The FTC's lawsuit comes after its two-year examination of the PBM industry. The FTC released some of its findings this summer in an interim staff report. It found PBMs operate in a deliberately complicated and opaque manner, which Garden-Monheit says allows them to charge outrageous drug prices without much pushback.

"Part of what we found that led to that law enforcement action is that, in some instances, patients were actually paying more out-of-pocket for insulin than the drug even costs, which is exactly the opposite of how insurance is supposed to work," she said. "You shouldn't be paying more yourself than the actual cost of the drug, so that's very concerning to us.

"We also examined a prostate cancer drug that cost about $200 for pharmacy, on average, to acquire. What we saw in our PBM study, as we reviewed their data, was that they are turning around and charging $6,000 for that drug. That's because they own the pharmacies and, to use the words of one of the PBMs themselves in the documents they turned over, they can "aggressively steer" patients to their own pharmacies to where their costs are higher."

Express Scripts sued the FTC over its interim staff report on PBMs, claiming it was false, misleading and harmful to the PBM industry. In response to the FTC's lawsuit over insulin, the three defendants denied the allegations at a congressional hearing in July. The heads of Caremark, Express Scripts and Optum Rx defended their practices and blamed drug makers for the high cost of meds.

"In 2023, we helped keep average patient cost for a 30-day prescription to $15 for those with employer-sponsored plans," said Dr. Adam Kautzner, president of Express Scripts.

Dr. Patrick Conway, CEO of Optum Rx, said, "The 5,000 customers who hired us - including employers, unions, health plans and governments - rely on Optum Rx to be the counterweight to the drug manufacturers' high and increasing list prices. Our negotiated discounts and clinical tools deliver more than $2,000 per person in annual average drug savings. And a recent analysis found PBMs saved the broader healthcare system approximately $145 billion annually."

David Joyner, who at the time of his testimony was president of CVS Caremark (and months later was named CEO of CVS Health), said, "From 2017-22, our proven tools and strategies drove down the net cost of brand-name drugs by 15%. Despite these successes, brand products with little or no competition remain the chief source of rising drug cost, spurred by their high list prices."

Regardless of who is responsible for high prices, patients such as Caillouet are having to make tough choices because of them.

"I just got to take the wallet and buy less groceries," he said. "If that's what you got to do, then you got to."

Fox 8 asked CVS Caremark, Express Scripts and Optum Rx for comment but did not get a reply.

According to the National Community Pharmacists Association, which represents more than 19,000 U.S. pharmacies, 300 independent pharmacies closed in 2023. According to a survey the NCPA conducted in 2024, almost a third of independent pharmacy owners shut down because of declining reimbursements by plans and PBMs.

Several states have passed laws seeking to rein in PBMs. Last year, a bill was introduced in Congress prohibiting PBMs from arbitrarily increasing fees or lowering reimbursements, but it has yet to go before the full Senate or House of Representatives for a vote.