Keith Dean
Jan 13, 2025
When Florida adopted the Prescription Drug Reform Act, one of the goals was to increase transparency for pharmaceutical companies as well as middlemen, known as pharmacy benefit managers (PBMs).
When Florida adopted the Prescription Drug Reform Act, one of the goals was to increase transparency for pharmaceutical companies as well as middlemen, known as pharmacy benefit managers (PBMs).
The idea was that better transparency into practices and pricing would help drive informed decisions and ultimately cut costs for consumer prescription purchases. One of the tenets of the legislation was to require PBMs to register with the state and the Office of Insurance Regulation. This is understandable.
However, when New Jersey recently passed a new rule similarly focused on increasing transparency, it also included other middlemen known as Pharmacy Services Administrative Organizations (PSAOs).
These organizations represent thousands of independent pharmacies, providing them with negotiating leverage that is on par with the largest national chain pharmacies.
At first glance, PSAOs appear beneficial to both pharmacies and patients. In theory, they help reduce the time and costs associated with contracting, freeing up pharmacists to focus on patient care.
However, given that the largest PSAOs are owned by the three largest drug wholesalers in the country (McKesson, Cardinal Health and AmerisourceBergen), it begs the question: Whose interests are they really looking out for?
Given that the largest Pharmacy Services Administrative Organizations are owned by the three largest drug wholesalers in the country (McKesson, Cardinal Health and AmerisourceBergen), it begs the question: Whose interests are they really looking out for?
According to a report from the U.S. Government Accountability Office, PSAOs are not supposed to be profit centers for wholesalers. The lack of transparency with the operations of wholesaler-owned PSAOs raises concerns and draws into question if they are actually shells to drive wholesaler profits.
What is known is that wholesalers sell drugs to pharmacies, which are the same pharmacies represented by their PSAO. It’s hard to imagine that those of us who get our prescriptions through this process are viewed as bigger priorities than their bottom lines.
Perhaps what’s intentionally being hidden in the PSAO structure is that they really exist to serve the interests of the drug wholesalers. In the end, this structure forces pharmacies to buy their inventory from a single supplier.
If this is the case, how are pharmacies supposed to be prudent purchasers of prescription drugs? And when costs rise, it’s patients who always seem to bear the burden.
As Florida’s health care landscape continues to evolve, it is crucial that our Legislature addresses transparency with pharmacy services administrative organizations – much like it did with pharmacy benefit managers.
This will close a key gap and provide a better picture of the full prescription supply chain, which is important to support lower pricing and better health care overall.
Keith Dean is the executive director of Floridians for Affordable Healthcare.