Testifying in Senate, NCPA leader cites ‘unfair’ PBM business practices

ALEXANDRIA, Va. In testimony before a Senate panel, independent pharmacy leader and Arkansas pharmacy owner Mark Riley charged that the pharmacy benefit management industry lacks transparency and accountability in its business practices and creates an “unfair marketplace” to the detriment of patients, employers and community pharmacies.

Riley addressed a hearing on competition in the health care marketplace as secretary-treasurer of the National Community Pharmacists Association and EVP of the Arkansas Pharmacists Association. Testifying before the Senate Commerce Subcommittee on Consumer Protection, Product Safety, and Insurance, he accused PBMs of manipulating the health system through deceptive business practices, and of competing unfairly with community pharmacies using their own mail-order pharmacy subsidiaries.

“Because of the preferential pricing afforded mail order pharmacies, one might assume that mail order prescriptions are cheaper. However, in my experience, this is not the case,” Riley asserted. “Mail order is steeped in deceptive pricing schemes that are intended to dupe employers into believing that they are saving money.”

Indeed, he told the Senate panel, “PBMs also fix pricing for the retail pharmacies who participate in their networks. This creates a huge conflict of interest because the PBMs also own mail-order pharmacies that compete directly with the retail pharmacies with whom they are contracted.

“This leads to the PBM being able to collect not only pricing information from the retail pharmacy, but also to collect patient specific data,” Riley testified. The result, he added, is that “PBMs have become increasingly aggressive with the large amount of data that they have and they are using this data to steer patients away from the community-based pharmacy into a mail-order pharmacy that the PBM owns. This type of self-dealing is becoming more and more prevalent in the marketplace and is at its heart anti-competitive.”

The pharmacy owner also charged PBMs with manipulating the health system “using their self proclaimed ‘cost saving tools’ for their own benefit at the expense of patients, employers, and taxpayers.

Riley also bore in the 2007 merger of retail pharmacy giant CVS with PBM giant Caremark, a deal which drew bitter opposition from many independent pharmacy operators. The merger, he charged, “allows CVS Caremark to monitor and utilize every aspect of the community pharmacy transaction to [its] own advantage.”