Editorial: Another layer of bureaucracy isn't the answer for beleaguered pharmacies, Gov. Pritzker

Chicago Tribune

03-03-2025

In Gov. JB Pritzker's Illinois budget address on Feb. 19, he lamented the decline of small-town independent pharmacies like those of Michelle Dyer, who abruptly closed three stores in rural Macoupin County during 2022, transferring their prescriptions to Walgreens.
As Pritzker described it, the reason for Dyer's abrupt shutdown wasn't competition from rival stores and online pharmacies, for instance, but rather the actions of pharmacy benefit managers, or PBMs. These are middlemen, acting on behalf of health insurers in negotiations with pharmacies and drugmakers. Retailers say they threaten the future of independent drugstores and the giant Walgreens alike.
The truth? More complicated than most anyone might think. And as for solving the problem of high drug costs, Pritzker's proposal for a new bureaucracy empowered to set maximum prices faces a rocky road in Illinois and in other states that are trying it.
With his 'Prescription Drug Affordability Act,' Pritzker envisions a blue-ribbon panel prying profits away from PBMs by capping prescription prices. But it's unclear who would benefit in this highly integrated marketplace if a nanny state were to intervene.
Big Pharma, at the top of the food chain, is well positioned to cash in if PBMs are weakened. Drug stores like Dyers' are middlemen themselves, and this legislation seems more likely to add administrative burdens than increase their profits. The state, meantime, purchases drugs on behalf of government insurance programs, and presumably Illinois could benefit if it succeeds in reducing the prices it pays. As for patients, in some cases they already use manufacturers' coupons and assistance programs to sharply reduce their out-of-pocket costs, with no new state board required.
The governor's proposed 'Affordability Board' would add another layer of complexity, potentially reducing access to cutting-edge drugs and likely facing a constitutional challenge if it followed through on fixing prices. And — do we really have to say it? — the last thing Illinois needs is yet another state board trying to control market forces the governor doesn't like. For a couple of years now, the General Assembly has considered setting up one of these boards and, so far, opted to stay out of it. Here we go again.
Skepticism about ham-handed state bureaucracies doesn't mean turning a blind eye to what Pritzker described in his speech as the 'opaque and often predatory tactics' of PBMs. Much of their negotiating leverage does indeed come from opaque tactics that boost their profits at the expense of other stakeholders. To call them predatory, however, ignores that they're one of the few checks on the near-monopolistic pricing power of drugmakers, which have jacked up U.S. prices far above those in other countries.
What's needed is comprehensive, nationwide reform that takes a holistic approach to a complex marketplace and introduces greater transparency. To some extent, the PBMs are starting to get the message and voluntarily change some of their least-transparent business practices.
Case in point: CVS Health's Caremark, the biggest PBM (yes, one of the companies Pritzker blames for wiping out drugstores is affiliated with the CVS drugstore chain). In a call with investors Feb. 12, the company touted two new programs aimed at making prices more transparent — and eliminating so-called market baskets that group drugs for pricing and work to increase PBM profits.
It's a start, but far from sufficient. In recent months the Federal Trade Commission has identified a slew of self-dealing practices that it claims PBMs use to inflate drug costs, restrict access to certain medicines and squeeze Main Street retailers. PBMs say the FTC has it all wrong, but the government investigations have been revealing.
In September, the FTC accused Caremark, Express Scripts and OptumRX of inflating the price of insulin, impairing patient access and raising costs for vulnerable Americans who need the drug every day to stay alive. In January, the FTC followed up by accusing those 'Big Three' PBMs of adding huge markups to specialty drugs for cancer and other critical conditions, then steering the most profitable sales to affiliated pharmacies.
Congress responded to these findings with plenty of fulminating but no constructive solution. Late last year, it advanced a half-hearted reform as part of a continuing resolution to fund the government. Given that it would have legitimized some of the self-dealing, it's just as well that 'reform' got dropped. PBMs and Big Pharma continue to blame each other for the high cost of prescriptions.
President Donald Trump has blithely promised to fix this mess, providing little indication of how. At one point, he vowed to eliminate PBMs altogether. That would be a mistake, as they are the only part of the supply chain positioned to challenge Big Pharma — and it's no crime to make a profit, after all. But the FTC's impressive reports indicate that seeking profits has sometimes turned into a harmful exploitation of market power.
We haven't yet seen a comprehensive reform proposal, but it will have to come from the feds. Medicare and Medicaid account for the bulk of U.S. prescription purchases, and Uncle Sam could use its enormous leverage more effectively. At the same time, we would welcome less finger-pointing, greater restraint and a unified effort to self-regulate from the warring companies involved.
As for Gov. Pritzker's proposal, laudable as his desire to fix this problem is, a new state drug board would only make matters worse.