Vinny Chiffy, Owner and Pharmacist at Parkway Drugs, said Congress must enact pharmacy benefit manager (PBM) reforms to end spread pricing, delink fees from drug prices, and ensure transparent and fair reimbursement, in order to safeguard patient access and affordability.
“PBMs, have quietly become one of the biggest drivers of increasing health care costs in New York,” said Chiffy. “Operating with little transparency, these middlemen distort the drug supply chain, inflate prices, squeeze independent pharmacies, and restrict patient access, all while profiting at the expense of those who need care most. They have consolidated power across the supply chain, from insurance plans to mail-order pharmacies, enabling them to dictate terms, extract fees and profit off higher prices. These practices have undermined competition and drive local pharmacies out of business. Rep. Malliotakis is championing legislation to end the incentives that enable PBMs to profit from higher drug costs. These bills would ban spread pricing, delink PBM compensation from drug prices, and require transparency and fair reimbursement for pharmacies.”
The Federal Trade Commission’s (FTC) July 2024 report on PBMs revealed that major players in the industry are profiting significantly at the expense of patients and local pharmacies. The report highlighted practices like steering patients to PBM-owned pharmacies and using complex rebate systems. Lawmakers, including Chiffy, are advocating for reforms such as banning spread pricing and increasing transparency.
According to Axios, an analysis of financial data shows that the three largest PBMs—CVS Caremark, Express Scripts, and OptumRx—generated over $7.3 billion from 2017 to 2022 by marking up specialty generic drugs significantly. Experts suggest these practices inflate drug prices while pressuring local pharmacies, prompting calls to decouple PBM profits from medication costs.
New York’s Medicaid managed care system illustrates the impact of spread pricing by PBMs. In late 2017, spread pricing surged to 39% of generic drug spending—approximately $5.62 per prescription—while pharmacies’ gross margins plummeted by 83%, leaving them with just 53 cents per prescription against a dispensing cost of $10.08. Researchers found that PBMs often reimbursed pharmacies below actual dispensing costs while retaining the difference.
The Pharmacists Society of the State of New York’s (PSSNY) FixRx initiative, where Chiffy holds a public relations leadership role, advocates for reforming New York’s prescription drug system by enhancing transparency, ending abusive spread pricing, and restoring fair reimbursements. PSSNY materials highlight that New York previously eliminated spread pricing in Medicaid managed care and continues efforts towards comprehensive PBM oversight.
