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Members of the public shared emotional stories about how practices by pharmacy benefit managers (PBMs) increase the cost of drugs, reduce patient access, and force independent pharmacies to close during an Aug. 1 Federal Trade Commission (FTC) open meeting.
“PBMS are part of huge corporate conglomerates that include large health insurers, drug relabelers, and pharmacies,” said Suzie Jing of the FTC Office of Policy Planning. The FTC’s recent interim report found PBMs “can harm competition” by giving preference to their own affiliates.
“We’ve seen initial evidence suggesting that PBMs steer specialty drug prescriptions toward their own pharmacies,” Jing said. “We also see evidence that PBMs pay their own affiliated pharmacies at inflated prices.”
The three largest PBMs manage more than 80% of all prescription claims and use this market power and vertical integration to build their profits. For example, Jing said, PBMs pay affiliated pharmacies an average of $6,000 per month for a prostate cancer drug that costs $229 to acquire.
While PBM representatives at the meeting said their organizations try to help people save money on prescriptions, Jing and other participants refuted those claims.
The impact of PBMs on patients
Perhaps the most emotional comments came from William Schmidtknecht, who described the death of his son following “greed by the PBMs.”
Schmidtknecht said his son Cole went to the pharmacy in early January “to fill a routine prescription that he would have paid less than $70 for in 2023.” Just ten days into 2024, “he went in there to get his prescription at a pharmacy, and his price was changed to over $500,” Schmidtknecht continued. “He died on Jan. 21st. He got rushed to the ER on the 15th of January with cardiac arrest from asthma and died six days later.”
“My son’s death is just one of many out there,” Schmidtknecht continued. “The reality is the greed, the tactics, the deception is killing people in this country. You guys can fix that. We need your help.”
Nicole Freedman from Delaware described the challenges a PBM posed for her family in obtaining a specialty drug.
“My daughter was diagnosed with cystic fibrosis through newborn screening in 2015. We spent the first five years of her life, vigilantly conducting airway clearance therapies. In 2019, she was approved for a new medication made by Vertex called Kalydeco,” Freedman said. “This medication, while not a cure, has certainly improved our quality of life. We are no longer beholden to the heavy equipment to conduct daily airway clearances.”
Freedman changed jobs and found that she had to arrange coverage for her daughter through a major PBM.
“On paper, PBMs seem to help save employers money. From first-hand experience, I can share that PBMs are not disclosing the costs that are being passed along to the employee. Through co-pay accumulators and strong-arming employees to use third-party administrators that usurp drug manufacturer coupons—and in my case, save on [specialty pharmaceuticals]—families like mine are now incurring more than $3,000 a year in medical debt,” she explained.
“Having to use a PBM means spending hours on the phone trying to navigate unexplained canceled shipments, having difficult and frequent conversations with my husband about medical expenses, and balancing our budget,” she added.
The oncologist’s view
A cancer doctor said PBMs interfere with physicians’ efforts to treat patients.
“When oncologists like us dispense drugs directly to patients, we see clinical and financial benefit to patients, Medicare, and employers,” said Dr. David Eagle of NY Cancer & Blood Specialists. “In contrast, with PBM-owned specialty pharmacies, we often see waste that is toxic to patients and costly to employers and Medicare.”
He said PBMs push patients to take drugs other than the ones preferred by their doctors and make it hard for medical providers to offer prescriptions. “PBMs exclude independent providers from limited networks and favor PBM-owned affiliates,” he added. “Where PBM’s cannot exclude us altogether, they weaponize reimbursement rates,” by forcing providers to charge “underwater rates”—less than the cost of acquiring the drugs.
The impact of PBMs on independent pharmacies
Independent pharmacists criticized underwater reimbursement rates, among other PBM practices.
Pharmacists Robin and Joe Craft lost four pharmacies in Central Ohio after 25 years because PBMs did not reimburse them the amount it cost them to obtain drugs.
“I’ll never forget the announcement of the PBM inquiry because I cried. In February of 2022, I still had hope that I could save our pharmacies from closure. The interim report insights are exactly in line with what I’ve witnessed,” said Joe Craft.
His wife Robin explained that despite having record volume in their final year, they closed because PBMs made them unprofitable.
“Everywhere we go, we run into former patients who tell us sad stories about how their lives have changed. Without our pharmacies, they can’t get delivery. They can’t find anyone to fill prescriptions after hours. They are lost, confused—on and on. They cry. We cry,” she said. “Joe and I invested half our lives, untold amounts of money, and so much passion to take care of our pharmacy communities. PBMs save no one money, they only take and take and take.”
Dr. Ashley Seyfarth, an independent pharmacist in rural New Mexico, called on FTC and CMS to “define reasonable and relevant” in contracts with PBMS.
“You have new contracts coming out for June 2025 now that are way below cost,” she said. “If I accept that contract now, there’s a clause in the contract stating that I agree that this is reasonable and relevant reimbursement. Well, I don’t.”
Seyfarth is caught between losing a large percentage of her business by refusing to work with PBMs and losing money on prescriptions that are not fully reimbursed. She said she can no longer serve many in her small community as a result.
Miguel Rodriguez, general counsel of American Pharmacies, noted PBMs reduce access to drugs through “reduction in pharmacy hours by chains, elimination of free delivery and another aspect of lack of access, which is phantom network access,” whereby independents who technically belong to a PBM’s network cannot afford to stock specialty medicines due to inadequate reimbursement.
Jeremy Counts, a representative of Pharmacists United for Truth & Transparency, added that PBMs coerce independent pharmacies to accept contracts that include such inadequate reimbursement.
“If pharmacies say anything about these abusive terms to the media or plan sponsors, they are threatened to be removed from conglomerate networks,” Counts said. “This is the most complex case of racketeering in the history of our country.”
