Wisconsin parents push to reform PBMs--powerful prescription middleman companies

MADISON, Wis. (WMTV) - Cole Schmidtknecht was diagnosed with asthma at 18 months old. He was put on a "life-changing" daily steroid medication.

"Cole was a very free-spirited kid," Shannon Schmidtknecht, Cole's mother, said with tears in her eyes.

Then in January this year, Cole- now 22-years-old-went to pick up his prescription.

"The insurance company changed the formulary, raised the price of it to over $500," Bil Schmidtknecht, Cole's father said. "He walked out. Chose rent over his medicine."

Days later, Cole's parents said he had a severe asthma attack without his inhaler. He suffered cardiac arrest and died.

Cole is not alone. The cost of prescription medications is on the rise. In some cases in the U.S., these prescriptions are double the cost of identical drugs in other high-income nations.

At the time, Cole's parents did not know why the cost increased. That is until they found the cost of Bil's prescription for his own asthma also increased by the same amount.

"Oh my gosh, this is what happened," Shannon Schmidtknecht recounted. "This is what happened to Cole.'

PBMs or Pharmacy Benefit Managers are the often unknown drug supply chain middlemen, tasked with keeping prices down for consumers and negotiating the terms and conditions for prescriptions, but otherwise accused by the Federal Trade Commission of inflating prices.

"It's just this unknown creature out there that's controlling care," Bil Schmidtknecht said.

This unknown, is further described in a Federal Trade Commission report released this summer as, "The powerful middleman inflating drug costs and squeezing main street pharmacies."

While we cannot confirm PBMs caused the price increase in Cole's case specifically, PBM's power over prescription drug access is also the subject of recent congressional hearings and an FTC lawsuit for allegedly inflating insulin prices.

The Pharmaceutical Care Management Association represents the six largest PBMs, including the PBM Cole's insurance worked with. The FTC is looking into all of them.

"At the end of the day, we work with drug manufacturers to provide or negotiate price concessions from them," Sean Stephenson, the director of state affairs for PCMA said. "That's really the only tool we have to help lower the cost of prescription drugs."

When asked what impact PBMs have on the price of prescription drugs, Stephenson responded "None, none at all."

Prescription drug costs and the list pricing are "exclusively" up to the drug manufacturer, according to Stephenson.

In response to the FTC and members of Congress arguing PBMs do in fact play a role in the rising cost of prescription drugs, Stephenson said, "Well I think they stand to, you know, gain by spreading falsehood."

Parents and patients are not alone in wanting reform.

Dan Strause retired from his career as a pharmacist and owner at the local, independent Hometown Pharmacy Chain to take on advocating for reform full-time.

"They're the most powerful, influential companies in our country that no one's ever heard of," Strause said. "Your heart just breaks, and it makes you angry that somebody is willing to do that to another person."

The FTC report describes PBM business practices as "extraordinarily opaque" and acting "without transparency or accountability to the public" when it comes to pricing transparency, leaving many pharmacists with little recourse when a prescription price like Cole's is raised overnight.

"We have no choice because three large PBMs control over 80%," Strause said. "So if you're going to serve, you are forced to take these contracts like it or not."

The FTC confirms that the three largest PBMs control nearly 80% of the prescriptions filled. Meanwhile, Stephenson said these days it is closer to 70%.

For now, Bil and Shannon want to breathe life into their son's memory, with Bil testifying in front of the FTC with his son's story earlier this summer.

"My son's death is just one of many out there," Bil said in front of the panel.

His parents, are dedicating their work to Cole and for the sake of transparency, vowing never again.

"Cole was a fight for the little guy kind of person, definitely a fight for what he believed was right type of person," Shannon said. "So now we're trying to take that and fight on his behalf."