PBM reform will reduce costs and benefit rural patients

Iowa’s local pharmacists are trusted and accessible health care providers, especially in our rural communities. Unfortunately, last year Iowa lost nearly 30 local pharmacies, and since 2014 we’ve lost over 200. These losses are especially hard for our rural communities where pharmacists are often the most accessible health care professionals.

A key reason for the decline of pharmacies is the unchecked power of Pharmacy Benefit Managers (PBMs) — profit-driven middlemen who have been allowed to operate with minimal oversight or regulation. Today just three of these large companies, ExpressScripts, OptumRx, and CVS, control nearly 80% of Americans’ prescription drug benefits. Their monopolistic control of the prescription drug supply chain has forced local pharmacies to cut back on staff, and even close their doors, ultimately leading to access issues and increased patient costs.

A report by the Federal Trade Commission released last summer found that through vertical integration and consolidation, PBMs were able to profit significantly by artificially inflating drug costs. They do this by negotiating discounts and rebates with manufacturers but never pass those discounts on to patients. They also control which drugs make it onto the lists of covered medicines (or formularies). PBMs prefer higher-cost drugs over more affordable generics because they can secure a higher discount and will push for patients to use more expensive options. In some cases, PBMs will deliberately exclude lower-cost generics from their formularies altogether.

PBMs also control how much pharmacies are reimbursed for dispensing medicines — often reimbursing them less than what it costs to dispense the drugs and pocketing the spread. And, because PBMs have their own chain and specialty pharmacies, they do almost everything they can to steer patients to their affiliated pharmacies — away from trusted local pharmacies.

The unchecked power of PBMs is bad or patients, but it’s especially bad for our rural patients, who are often already dealing with limited access to health care.

Now that the 2025 legislative session is underway, our elected officials must prioritize meaningful PBM reform. Thankfully, several legislators are taking PBM reform seriously. HSB 99 marks a critical first step — requiring PBMs to share rebates with patients and improving reimbursement rates for our struggling local pharmacies.

By passing reforms like HSB 99, legislators will ensure that Iowa’s rural patients can access critical health care and that pharmacists can serve the communities that depend on them.

Dwight Baldwin is president of Iowa State Grange.