Guest Commentary | Insurance industry middlemen impede care access for underserved local communities – Santa Cruz Sentinel

By Donaldo M. Hernandez

As a physician serving low-income and underserved communities like those in Watsonville and Salinas, I understand the unique health challenges they face. Many of my patients are farmworkers from Mexico, with a significant portion being indigenous people who speak Spanish as their second language. They often are not familiar with the complexities of the United States’ health care system, leading to confusion and worse health outcomes when a pharmacy entity denies them access to a needed prescribed medication and they aren’t aware of their options to fight back. To ensure that our local communities can access the treatments they need for better health, lawmakers must support efforts to reform insurance industry middlemen who continue to drive up out-of-pocket costs at the pharmacy counter.

Pharmacy benefit managers (PBMs) work between health insurers and drug manufacturers to negotiate the purchase price for drugs on behalf of health insurance plans they represent. However, with little transparency or regulatory oversight, PBMs have become one of the most influential stakeholders in the health care industry. PBMs use their influence by deciding which treatments patients have access to, how much they’ll be required to pay out of pocket to access treatments prescribed by their doctor, and more.

Across California, there are millions of patients living with at least one chronic illness, such as heart disease, asthma, and diabetes, and a significant number of those patients manage multiple chronic conditions simultaneously. For these individuals, consistent and uninterrupted access to prescribed treatment plans is critical to ensure that they can manage their symptoms and live healthy lives.

However, in the name of cost containment for the health plans they represent, PBMs continue to impose barriers on medication access and affordability – forcing many patients and providers to jump through hoops and delaying or blocking access to an effective treatment plan. PBMs often direct patients towards higher-cost drugs and pharmacies, impose substantial administrative fees, and compensate pharmacies significantly below their actual cost of acquiring prescription medications.

Three PBMs, all owned by for-profit corporations, control 79% of the entire PBM market across the U.S. Because such a small number of PBMs control a large portion of the market, they can wield significant influence across the health care industry. In a practice called spread pricing, PBMs frequently charge health plans more for prescription drugs than they pay to reimburse pharmacies, pocketing the difference to improve their own bottom line. Worse, PBMs fail to pass along any savings or discounts they secure through the purchases of medicines to the patients who rely on those treatments to stay healthy.

Introduced by Sen. Scott Wiener, Senate Bill 966 (SB 966) would require that PBMs be licensed through the State Board of Pharmacy and do not charge health plans more than they pay a pharmacy for a medication. The bill also empowers patients to have a choice in their health care by allowing them to select their preferred in-network pharmacy – reducing the influence of PBMs in dictating where and when patients can access their medications. Additionally, SB 966 mandates transparency in drug rebates and discounts negotiated by PBMs, ensuring that all negotiated rebates are passed through to payers or patients.

SB 966 would protect patients from predatory PBM practices and promote a more transparent and equitable health care system. It would also help patients not have to make impossible decisions between affording their medication and other daily living essentials, such as food or housing. When a patient’s out-of-pocket health care costs become too high to manage, they are at an increased risk for abandoning their treatment plan, which could result in unnecessary emergency room visits or additional medical complications. SB 966 is a critical next step to improving accountability and oversight into PBM practices.

Donaldo M. Hernandez, MD, FACP, is an internal medicine physician who practices in Santa Cruz County.