Protecting Local Pharmacies

At a time when the Trump Administration and Republicans in Congress are attempting to gut health care coverage for tens of millions of Americans, fighting for affordable health care is more important than ever.

Expanding access to affordable health care has long been a passion of mine. While many people know me for my work on housing issues, I’ve authored more bills expanding access to health care than on any other issue. This year, my team and I are advancing ambitious legislation – the Prescription Drug Affordability Package – to cap out-of-pocket costs for insulin at $35/month (SB-40), and to put an end to abusive practices by drug middlemen (known as pharmacy benefit managers or PBMs) that are driving up drug prices and putting pharmacies out of business (SB-41).

No one should be forced to choose between paying rent and paying to fill their prescriptions, but that’s exactly the choice many families face. In particular, people living with diabetes can struggle mightily to afford insulin. Capping monthly insulin costs at $35 would be hugely beneficial to so many Californians.

For many people, having a local pharmacy in their community is just as important in terms of accessing affordable medication as affordable prices. In addition to filling prescriptions, neighborhood pharmacies provide trusted guidance on medication usage, especially when English isn’t a patient’s first language. They advocate for patients, and they bring communities together. But over the last decade, San Francisco has experienced the closure of nearly 40% of its pharmacies.

Operating a physical pharmacy is becoming less economically viable due in part to PBMs providing absurdly low reimbursements for pharmacists who fill prescriptions and effectively forcing patients to use PBM-owned mail-order pharmacies instead of their neighborhood pharmacies. It may be hard to imagine a pharmacy losing money on a prescription worth several hundred dollars. But under our current reimbursement system, these negative margins are becoming increasingly common. It is leading to the closure of brick-and-mortar pharmacies throughout our City.

Pharmacists, patient advocates and consumer watchdog groups agree that the problem stems from the unfair business practices of PBMs, which play a central role in the medication supply chain. These pharmaceutical intermediaries manage prescription drug benefits for insurers, large employers and certain Medicare drug plans. They also negotiate with manufacturers on drug costs and with pharmacists on reimbursements. As their influence has grown, they’ve used their powerful position to hike drug prices and keep reimbursement rates low.

The PBM industry is highly consolidated and very lucrative. Known as the “Big 3,” the three largest PBMs – CVS Caremark, Express Scripts and OptumRx – cover more than 180 million people in the U.S. and account for nearly 80% of filled prescriptions in the marketplace. Their control of the market and their abusive practices directly threaten the survival of neighborhood pharmacies and drive up drug costs.

State governments across the country, and even Congress, have recognized that these anti-competitive practices need to end. In the last several years, 25 states have imposed regulations on the PBM industry. SB-41 will not just bring California in line with its neighbors, the bill will create some of the strongest protections and oversight in the country.

I authored legislation last year to put a stop to PBMs’ abusive practices, but the bill, sadly, was vetoed by the Governor. I am pleased that Gov. Gavin Newsom is now working with us to advance smart regulation of PBMs, both through the budget and through the legislation I’m authoring. I’m optimistic we will be able to send a strong bill to the governor.

Our PBM regulation is quite robust. It requires PBMs to pass through 100% of the prescription drug rebates they negotiate for pharmacies and health plans instead of keeping a cut, removing their incentive to push prices higher and higher. We’re also requiring them to pay pharmacies more of what the insurer pays them, helping ensure pharmacies can stay open.

One of the most visible abusive PBM practices is steering patients to their preferred pharmacies, which are often mail-order pharmacies they own. If you’ve ever been involuntarily moved to a mail-order pharmacy with little or no explanation – or told you can get a 90-day medication supply from mail order but only a 30-day supply from your local pharmacy – you’ve been affected by this abusive PBM practice, and my bill would prohibit this behavior.

Particularly in our current political environment, with a frontal assault on the very idea of health care access, our work takes on added importance. I look forward to getting the job done.

As always, I’m deeply grateful for the trust you’ve placed in me as your state senator. Do not hesitate to reach out to my office with anything you may need.

Scott Wiener represents San Francisco and northern San Mateo County in the California State Senate. He chairs the Senate Budget Committee and co-chairs the California Legislative Jewish Caucus. He previously chaired the Senate Housing Committee and the California Legislative LGBTQ Caucus. He can be reached at 415-557-1300 and https://sd11.senate.ca.gov/contact.