AG Ellison aims to stop pharmacy benefit managers from owning, operating pharmacies

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Pharmacy in rural Minnesota (FOX 9)

ST. PAUL, Minn. (FOX 9) - Minnesota Attorney General Keith Ellison is including the state in a bipartisan coalition of 39 attorneys general to get the United States Congress to prohibit pharmacy benefit managers from owning or operating pharmacies.

Pharmacy benefit manager scrutiny

Big picture view:

Pharmacy benefit managers (PBMs) are meant to operate as "middlemen" who negotiate prices with insurance providers and drug manufacturers.

However, many PBMs are under the same ownership umbrella as large insurance companies and pharmacy chains.

The Minnesota Attorney General's Office blames "horizontal consolidation and vertical integration" for transforming PBMs "from useful administrative service providers into market-dominating behemoths that control the industry."

The AG's office adds that PBMs are contracting with as well as have power over their own pharmacies' competition through ownership of affiliated pharmacies. The AG's office continues by saying small business pharmacies are then forced "to accept contractual terms that are confusing, unfair, arbitrary, and harmful."

Data from the Federal Trade Commission shows about 10% of rural independent pharmacies have closed in the United States in the past decade. The FTC's full July 2024 report can be viewed below:

The effort is led by attorneys general from Arkansas, Massachusetts, Missouri and Vermont.

Other states with attorneys general in the coalition include Alaska, American Samoa, Arizona, California, Delaware, District of Columbia, Hawaii, Illinois, Kentucky, Louisiana, Maine, Maryland, Michigan, Mississippi, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, the U.S. Virigin Islands, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

Attorney General Keith Ellison statement

What they're saying:

Attorney General Keith Ellison released a written statement saying, "My mission is to help Minnesotans afford their lives, which is why I am taking on pharmacy benefit managers once again. PBMs were supposed to help lower drug costs by negotiating rebates and bulk discounts with prescription drug manufacturers and passing the savings along to consumers. Instead, the PBMs themselves are pocketing the savings they generate and passing high drug costs along to consumers. This is unacceptable, and it is just the beginning of the issues PBMs cause. Right now, PBM-affiliated pharmacies are causing serious harm by, among many other things, using their power and leverage to drive independent pharmacies out of business. This is particularly harmful to folks in Greater Minnesota who generally have fewer pharmacy options to choose from. Today, I am standing with a bipartisan coalition of attorneys general and calling on Congress to pass legislation that would prohibit PBMs from owning or running pharmacies. The last thing we need is for these greedy middlemen to acquire more power to drive up prices on the drugs Minnesotans depend on."

What's next:

The coalition argues that Congress needs to act in order to restore a free market and protect consumers as well as small businesses.

The goal is to pass a law that prevents PBMs and their parent companies from owning pharmacies, according to the news release from the Office of Attorney General Keith Ellison.

Minnesota pharmacies closing

Dig deeper:

Minnesota has lost hundreds of pharmacies in a little over a decade, creating "pharmacy deserts" that are forcing people to travel a lot further or rely on mail service to obtain their prescription medications.

State and federal regulators are also pointing the finger at PBMs.

In July 2024, the Federal Trade Commission found "these powerful middlemen may be inflating drug costs" and "squeezing main street pharmacies."

The report's findings state: "PBMs wield enormous power over patients’ ability to access and afford their prescription drugs, allowing PBMs to significantly influence what drugs are available and at what price. This can have dire consequences, with nearly 30 percent of Americans surveyed reporting rationing or even skipping doses of their prescribed medicines due to high costs, the report states.

The Source: This story used information from a news release shared by the Minnesota Attorney General's Office and past FOX 9 investigative reporting.

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