Tester Demands Action to Hold Massive PBM Corporations Accountable for Squeezing Small Rural Pharmacies

In recent hearing, Senator condemns Pharmacy Benefit Managers for keeping the cost of prescription drugs too high and putting local pharmacies out of business

As part of his continued push to lower health care costs and hold massive corporations accountable, Senator Tester at a hearing last week slammed the detrimental impacts that Pharmacy Benefit Managers (PBMs) are having on local pharmacies in Montana and the consumers that rely on them.

During the hearing, Tester underscored the lack of transparency in the PBM industry that allows these massive companies to undercut small pharmacies, while price gouging consumers.

“[PBMs] were set up for all the right reasons…but from what I see them doing in my state, I don’t think the consumer gets much benefit and they’re shutting down small business on main street right and left – and those are called our local neighborhood pharmacies,” said Tester. “So as far as holding big the big pharmaceutical companies accountable, I don’t see it. And the reason I don’t see it is because there is no transparency in PBMs…and quite frankly, when you combine that with anti-competitive tactics, this is a recipe where the only people that win in health care costs are the PBMs.”

Tester questioned a witness representing small pharmacies, saying: “Mr. Oftebro, tell me about some of the anticompetitive tactics that PBMs are using to squeeze small pharmacies like yours, like the one they have in my home town – population 600 – and how they’re pushing you out of their network and limiting your abilities as rural community providers.”

Under Medicare Part D, Medicare makes partially capitated payments to private insurers, also known as Part D sponsors, for delivering prescription drug benefits to Medicare beneficiaries. Often, the Part D sponsor or its PBM receives additional compensation after the point-of-sale that serves to change the final cost of the drug for the payer. These are called DIR fees.

In recent years, PBMs have increasingly returned to pharmacies days or even weeks after the point-of-sale to demand more in DIR fees. From 2010 to 2019, CMS documented a 91,500 percent increase in DIR fees paid by pharmacies.

Tester has led the charge to lower health care costs and hold massive PBM companies accountable. Last May, Tester successfully pushed the Biden Administration to lower prescription drug costs for Montana seniors by closing a Center for Medicare and Medicaid Services (CMS) loophole that allowed PBMs to retroactively charge excessive fees. This will benefit patients by lowering out-of-pocket costs and help rural pharmacies stay in business by increasing predictability and transparency.

And last August, Tester voted to pass the Inflation Reduction Act, which cut health care costs for working families by allowing Medicare to negotiate drug prices and capping the price of prescription drugs, like insulin, for Medicare patients.