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Experts tell Assembly panel PBM market power may raise drug costs and squeeze independent pharmacies
Summary
Two health‑economics witnesses told a legislative committee that consolidation and vertical integration among pharmacy benefit managers (PBMs) can steer prescriptions to affiliated pharmacies, raise list prices and reduce access for independent pharmacies; witnesses outlined policy options including delinking PBM pay from list prices and setting reimbursement floors for unaffiliated pharmacies.
Two health‑economics experts told the Assembly Health Committee that pharmacy benefit managers’ growing market power and vertical integration can raise drug spending and weaken independent pharmacies.
Professor Kakani of Cornell and Anna Keltenbach of Veradent Research described how PBMs — intermediaries hired to manage prescription benefits — negotiate with manufacturers and pharmacies, often collect payments from manufacturers for formulary placement, and sometimes own pharmacies that dispense drugs. "About 80% of the market is controlled by three firms," Professor Kakani said, adding that affiliated pharmacies now account for a large share of dispensing for some drug types. Both witnesses cited recent federal reports showing PBM‑owned pharmacies can receive higher reimbursements and that PBMs can steer profitable…
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