PBM issue letter

October 2, 2025

October is American Pharmacists Month, intended to show appreciation for pharmacists’ work in taking care of patients daily. Appropriately, the final section of SB252, The Community Pharmacy Relief Act, became law on October 1 and mandated that pharmacy benefit managers (PBMs) must pay independent pharmacies at or above Alabama Medicaid rates for their services.  This is by no means a windfall, as Medicaid rates were defined seventeen years ago and have not been revisited to address inflation and increased regulatory costs. But it does provide a measure of predictability of pharmacies’ revenues and will certainly help to prevent the closure of pharmacies across the state.  While pharmacists are saluted this month, we in turn tip our hats once more to Alabama’s legislators, who listened to our concerns and passed SB252 unanimously in both houses of the legislature.

A year ago, most Alabamians had no knowledge of what a pharmacy benefit manager (PBM) was, but now, their business practices have come to light.

Predictably, opponents of any transparency for PBMs have attacked the payment provision of this law in online forums this week.  (Some of these opponents appear to be robotic.)  SB252 did address some key points of the PBM issue, and by the admission of leadership in both houses it is intended to be a “Band-Aid” to keep pharmacies solvent with an implicit pledge to revisit the issue and address the entire problem.  Because this bill does not address all of the levers in the PBM machine, so to speak, it allows PBMs to manipulate other levers to maintain high costs for patients, employers, state agencies and taxpayers.  This incompleteness is what has provided ammunition to opponents.

Since the PBMs’ complete control over prescription transactions in our state is not wholly addressed by SB252, PBMs have a loophole to increase patients’ costs at the register.  For example, many benefit plans specify a $15.00 copay for generic drugs, with the patient paying less if the “contracted amount” to the pharmacy is less than $15.00.  Since SB252 was signed in April, pharmacies have seen reductions in their payment amounts on generic drugs, in many cases being paid less than $2.00 for a claim.  The result of this has been that patients have paid less than $2.00 in such cases, likely believing that the PBM covered the rest.  With the final provisions of SB252 in effect, those total amounts paid to the pharmacy have increased from $1 or $2 to $13 or $14 in many cases, which PBMs have simply passed on to the patients despite a provision in the bill specifying that they may not do so.

The question patients and lawmakers should ask of their employer or of the state agency that pays for their prescriptions is this:  “How much did our plan ultimately pay for the prescription that was underpaying my pharmacy?”  PBMs use low copays at the register to give patients the impression that they are providing a valuable service, but they then invoice the employer group or state agency at a significant markup, often well over what the pharmacy would have charged with no insurance.  In other words, the ultimate cost of the drug is inflated and the PBM keeps the difference, which drives up patients’ premiums.  The patients are paying a low price at the register but paying for it on the back end.  It is admittedly a brilliant sleight of hand by the PBMs.

We must address these incentives that PBMs have given themselves to increase costs for everyone in our state.  Lawmakers must scrutinize state agencies’ ultimate costs for drugs at the individual claim level and compare them to fair market rates.  The result will likely shock them.