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Tampa lawmaker Jackie Toledo leads push to lower drug costs in Florida

A bill by the Republican state representative would regulate go-between companies known as pharmacy benefit managers.

Jackie Toledo recently had an issue with the cost of medication. It’s a problem the Republican state representative from South Tampa said she’s heard too many times before.

“The doctor wrote my daughter a prescription and told us it would be zero or $25 depending on our insurance,” she said. “He even gave me a coupon to make it cheaper.”

Toledo had the prescription filled at her local CVS pharmacy, which wanted to charge her $480. She wasn’t going to pay that price.

The pharmacist wouldn’t accept the coupon her doctor gave her, but found another one that lowered the price to $200. Toledo still wouldn’t pay it, so the pharmacist called a pharmacy benefit manager — a company that administers prescription drug programs for commercial health plans.

“They were able to accept the original coupon then," she said.“Otherwise, I couldn’t have afforded it. My daughter would have had to wait to get her medication.”

Toledo said this kind of scenario is happening way too often. That’s why she’s filing a bill today to regulate pharmacy benefit managers, or PBMs. The measure, she said, would keep drug costs down for consumers and independent pharmacies in Florida.

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Called the Prescription Drug Cost Reduction Act, the bill aims to prohibit health care monopolies that reduce patient choice, and to eliminate the practice of “steering" patients to PBM-owned pharmacies. It also would prohibit predatory practices that threaten to squeeze independent pharmacies.

“Florida should have been the leader in this,” said Kevin Sneed, dean of the University of South Florida’s College of Pharmacy. “Until it happens in Florida and Texas, it hasn’t happened nationally when it comes to health care. With 22 million people in our state, these costs affect us more than smaller states.”

Pharmacy benefit managers act as “middlemen” who help decide the drugs patients get at the pharmacy and how much consumers will pay for them, if they’re insured. They came about in the 1960s as health insurers expanded drug coverage to wider areas. These companies were created as a way to make money on processing drug claims for insurers, according to Kaiser Health News.

Later, when the cost of drug plans skyrocketed for employer and commercial health insurance coverage, PBMs expanded into the market as way to “negotiate” prices on behalf of large corporate groups. They also play a role in generating “formularies,” the lists of drugs covered by each insurer. For drug makers, these lists are considered coveted spots.

“There’s no regulation right now. There’s no one telling them they can’t price gouge,” Toledo said of PBMs. "But what they’re doing is hurting patients and driving out competition from local, independent pharmacies.”

Pharmacy benefit managers have made national headlines in recent years as rising health care costs dominate political conversations. Consumers may know the names of PBMs like CVS Caremark, Optum Rx and Express Scripts, but few really know what they do, said Dr. Dipal Patel, a pharmacist and owner of Acme Pharmacy in Tampa.

“PBMs take money from all of us — the patient through the copay, the drug maker, the pharmacy through dispensing fees,” Patel said. Over the course of his 10-year career of working for himself, he said, he’s watched his business get smaller while PBMs grew bigger and more powerful.

“They limit the distribution and the customers who can come here. It’s very hard to survive as an independent business in this climate,” Patel said.

Patel employs 15 people in his pharmacy on Fowler Avenue in Tampa. He’s converting 4,000 square feet of his pharmacy into a pet supply store and downsizing the pharmacy operation to just 2,000 square feet. The switch is out financially necessity, he said.

Today, three PBMs control the majority of the American prescription drug market. They say they save employers millions of dollars a year, but they also make money through these arrangements by pitting drug makers against each other on price negotiation.

“The PBM’s role is to use leverage to determine the lowest cost possible for patients,” Derica Rice, an executive vice president with CVS Caremark, told the Tampa Bay Times in a recent interview. He stressed that PBMs like CVS Caremark are essential in keeping health insurance premiums low.

In a statement Monday, Rice said CVS Health is reviewing Toledo’s legislation.

“Actionable transparency is a pillar of our commitment to helping our clients access lower cost prescription drugs,” the statement said, "and we look forward to partnering with the Florida Legislature to ensure that any reforms considered will meaningfully lower costs for patients and taxpayers.”

Toledo said she hopes her bill will eliminate “spread pricing," which is the difference between what PBMs charge health plans and what it actually reimburses to the pharmacy. PBMs generally do not release this information and claim it’s a trade secret.

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PBMs make money by pocketing the difference between what they charge their clients for drugs and services and how much they pay manufacturers for drugs. They also profit from rebates, instead of passing on those savings to patients.

Patel said many residents who live near his pharmacy have a Humana health insurance plan offered through the state’s Medicaid program. “But they can’t come here to get their prescriptions filled because the PBM decided they should go to the pharmacies they own,” he said.

In a statement, CVS Health countered, saying 40 percent of pharmacies in the CVS Caremark network are independently owned. The company also said that “more than 98 percent” of rebates it receives are passed on to clients such as employers and health plans and “typically” are used to reduce costs for consumers.

Toledo’s bill aims to prevent this kind of practice and allow patients to fill prescriptions at the pharmacies of their choice.

Sneed called Toledo’s legislation “long overdue.”

“It’s time for transparency around contracting and more affordable prices for patients,” he said.

State Rep. Randy Fine, R-Palm Bay, will co-sign the bill. Rep. Kamia Brown, D-Orlando and state Sen. Jose Javier Rodriguez, D-Miami, have voiced their support.

“These groups have powerful lobbyists. They will try to scare us,” Toledo said. “But it’s time to set some rules and regulations to help bring down costs for patients.”

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