Op/Ed: PBM reform will make healthcare more transparent and affordable for everyone

Helping Hoosiers afford the medicines they need while also protecting the trusted local healthcare providers they depend on is a good thing. And Indiana’s elected representatives in Congress should be applauded for trying to do just that.

I’m talking about efforts underway in Washington to finally reform the harmful actions of pharmacy benefit managers, or PBMs. These are the companies most often directly responsible for increasing the costs of your prescription medications and driving our trusted community pharmacies out of business.

A misguided op-ed was recently published in the Indianapolis Star arguing that federal PBM reform would harm Indiana patients and businesses while threatening to undermine the state’s healthcare future. This is simply not the case. PBM reform is about better serving patients by addressing concerns over transparency, enhancing competition, and making healthcare more affordable for Hoosiers.

PBMs act as middlemen in the drug market between drug manufacturers, insurers, and pharmacies.  Among other things, they negotiate discounts called rebates with drug manufacturers which should be passed on to the patient. However, a lack of transparency prevents patients and employers from ever knowing whether they are receiving the benefit of these savings.

Providing greater transparency in drug pricing, including negotiated rebates, will help both patients and employers better understand the true cost of covered medications and ensure negotiated discounts are benefiting those paying for the medication.

Just three multi-billion dollar companies control over 85% of the PBM market. Through a series of mergers, acquisitions, and buyouts, the “Big Three” have also purchased insurance companies and pharmacies, resulting in both vertical and horizontal integration.  This, combined with a lack of transparency and bargaining power in contracting, hinders competition and hurts patients.

Reformers seek a fair and competitive marketplace. As federal reform efforts continue, Indiana has already enacted state legislation such as equal access to networks, equal reimbursement terms and licensing of PBMs by the Department of Insurance. Further, in May 2023 Gov. Eric Holcomb signed into law Senate Enrolled Act 8 which mandates that at least 85% of negotiated discounts be provided to patients with individual health insurance coverage and 100% of negotiated discounts be passed onto the health insurance plan sponsor.

This legislation is a huge step forward in helping Hoosiers save at the pharmacy counter while giving small employers the ability to decide how best to use rebates to benefit their employees.

A more transparent and fair system results in savings for patients, providers, businesses and taxpayers. PBM reforms in other states, including neighboring Kentucky, have already resulted in millions of dollars in savings for state Medicaid programs by eliminating “spread pricing” where a PBM charges the state more than they actually reimburse a pharmacy for processing a pharmacy claim.

We urge Senators Todd Young and Mike Braun to support bipartisan federal PBM reform legislation. Greater transparency, enhanced competition, and more affordability for patients can be achieved through thoughtful reforms.

It’s time to help Hoosier families afford their medicines while protecting access to their trusted local pharmacies.

Stephanie Arnett, PharmD, serves as the president of the Indiana Pharmacy Association. A graduate of Butler University College of Pharmacy & Health Sciences, she has extensive experience in the retail pharmacy setting and academia.