Attorney General Charity Clark today led, along with Arkansas Attorney General Tim Griffin, Massachusetts Attorney General Andrea Joy Campbell, and Missouri Attorney General Andrew Bailey, a coalition of 39 state and territory attorneys general in formally urging congressional leadership to pass an act that would prohibit pharmacy benefit managers (PBMs) from owning or operating pharmacies.
“The high cost of prescriptions drugs in this country is unacceptable, and PBMs are part of the problem,” said Attorney General Clark. “When PBMs operate pharmacies, they obscure the true cost of prescription drugs, squeeze out independent pharmacies, reduce competition, and narrow consumer choice. To protect consumers, I’m calling on Congress to prohibit pharmacy benefit managers from owning and operating pharmacies.”
PBMs are third-party administrators of prescription drug programs for health plans. Over the past few decades, horizontal consolidation and vertical integration have transformed PBMs from useful administrative service providers into market-dominating behemoths that control the industry. Each of the top six PBMs, including the two PBMs that make-up 95% of business in Vermont, CVS and Evernorth, operate their own affiliated pharmacies, while five of the top six are also a part of parent conglomerates that operate insurance companies and health care clinics. PBMs—through ownership of affiliated pharmacies—are contracting with and have power over their own pharmacies’ competition. The PBMs then use their place as middlemen to exert this power in ways that harm independent pharmacies, forcing these small businesses to accept contractual terms that are confusing, unfair, arbitrary, and harmful. This has contributed to a sharp decline in the number of independent pharmacies operating. In 2013, Vermont had 35 independent pharmacies, but today there are only 14.
Last year, Attorney General Clark sued PBMs Evernorth and CVS for illegally driving up prescription drug costs in Vermont. That lawsuit alleges that these companies violated Vermont’s Consumer Protection Act by manipulating the marketplace and reducing access to certain prescription drugs, including lower-cost drugs, through a series of tactics with no transparency in their decision-making process. That lawsuit continues.
The letter sent today urges Congress to take action and protect consumers by enacting a law prohibiting PBMs or their parent companies from owning a pharmacy.
In addition to Attorney General Clark, the letter was signed by the Attorneys General of Alaska, American Samoa, Arizona, Arkansas, California, Delaware, the District of Columbia, Hawaii, Illinois, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Virgin Islands, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
The letter is available to read here.
CONTACT: Amelia Vath, Outreach and Communications Coordinator, 802-828-3171