The California Attorney General along with 38 attorneys generals, which includes those representing United States territories and the District of Columbia, urge Congress to pass an act prohibiting pharmacy benefit managers, their parent companies or affiliates from owning or operating pharmacies, according to an April 14 letter to Congress.

According to this letter, “PBMs have overtaken the market and now wield outsized power to reap massive profits at the expense of consumers. The rise of PBMs as middlemen in the prescription drug market has resulted in patients facing fewer choices, lower quality care, and higher prices.3 PBMs’ use of affiliated pharmacies—pharmacies owned by either the PBM itself or the PBM’s parent company—has exacerbated the problem of manipulated prices and unavailability of certain prescription medications.”

“Over the past few decades, horizontal consolidation and vertical integration have transformed PBMs from useful administrative service providers into market-dominating behemoths that control the industry. The three largest PBMs process 80% of the nation’s prescriptions and bring in 70% of the specialty drug revenue. Furthermore, these same PBMs, along with the next largest three, are vertically integrated both upstream and down. Each of the top six PBMs operate their own affiliated pharmacies, while five of the top six are also a part of parent conglomerates that operate insurance companies and health care clinics.”

“The PBMs then use their place as middlemen to exert this power in ways that harm independent pharmacies, forcing these small businesses to accept contractual terms that are ‘confusing, unfair, arbitrary, and harmful.’ PBMs’ position further allows and incentivizes them to provide their affiliated pharmacies with more favorable contract terms, steer consumers away from independent pharmacies to their own affiliated pharmacies, and otherwise engage in tactics aimed at forcing their competition out of business. Over the course of the last decade, approximately ten percent of rural independent pharmacies in the United States have closed.”

“The control of the pharmaceutical ecosystem by PBMs has resulted in decreased access, affordability, and choice for many Americans seeking prescription healthcare. Congressional action is warranted to restore a free market and protect consumers and small businesses.”

“As self-designated middlemen, PBMs should not be permitted to own or operate affiliated pharmacies. Further, they should not be able to skirt such a prohibition by having a parent company or other affiliated healthcare conglomerate own a pharmacy. PBMs should be prohibited from having direct ownership ties to the parties they purport to be bridging. This requirement would allow pharmacies to compete on fair terms and create a market that is more accessible to consumers.”