Parasitic Pharmacy Benefit Managers Target 340B

By 340B Matters

In the complex drug-pricing marketplace lies a murky underworld of pharmacy benefit managers (PBMs). Ostensibly, these companies negotiate lower drug pricing for insurers and (ideally) patients. They’re also now firmly rooted in the 340B Drug Discount Program reimbursement process and take a cut of every transaction.

It wasn’t supposed to be this way. The federal 340B law makes no mention of PBMs. It’s strictly a relationship between drug manufacturers, safety-net healthcare providers and state Medicaid agencies. But over the last few years PBMs have insinuated themselves into the machinery.

Under the law, pharmaceutical manufacturers are required to offer lower pricing to hospitals and clinics that treat high numbers of low-income patients. Health providers are then reimbursed at standard negotiated Medicaid or commercial insurance rates. They use the revenues generated to help subsidize the operation of emergency rooms, diabetes and cardiac clinics and much more for underserved populations.

PBMs now handle the lion’s share of prescription reimbursement to American pharmacies. They’re getting more aggressive with 340B contract pharmacies and in many cases offer them lower reimbursements than for non-340B scripts. This leaves safety-net providers with less resources. Meanwhile, PBMs are taking a cut both on the front end and through rebates from the manufacturers behind the scenes.

States are now passing laws to end the discriminatory reimbursements. They include Georgia, West Virginia, Tennessee, Ohio, Oregon, Wyoming, Montana, South Dakota, Minnesota, Utah, Rhode Island, Wisconsin, and Michigan. Newly added states this year: Arkansas, Indiana, Tennessee, Illinois, Kansas, Nebraska, North Dakota, and Mississippi.

But the legislative trend hasn’t stopped the PBMs from targeting 340B. Express Scripts recently informed pharmacies that all 340B prescriptions must be specially coded “N1.” The only plausible reason for the request is to more easily identify 340B transactions so the company can take a cut. Express Scripts claims the reporting requirement is in the “spirit of greater transparency.”

That’s poppycock.

“We question why a PBM has appointed itself to police a federal program to which it is not a party and which will bring no benefit to either the 340B program or the millions of patients who rely on the program’s benefits,” wrote the American Hospital Association in a recent letter to Express Scripts.

PBMs must be reined in by all state legislatures before the companies suck the lifeblood out of our nation’s frontline healthcare providers. Their parasitic role has no place in the 340B program.