Korean-American-owned pharmacies will shut down on April 2 to protest against drug fee increases.
Since January, pharmacy benefit managers (PBMs), the middlemen who manage the prescription drug billing process, have unilaterally imposed fees of up to 25 percent, causing them to operate at a loss, according to the pharmacies.
Small pharmacies say that PBMs have been unilaterally refusing to pay for drugs, or steering Korean-American customers to larger chain pharmacies by offering discounts and signing them up for mail-in prescription programs.
William Kim, a pharmacist who bought a pharmacy in Little Tokyo two years ago, said, “The burden of the fees is growing. I never imagined it would be so difficult to run a pharmacy.”
In response, the California Korean American Pharmacists Association (KAPA), along with the California Pharmacists Association (CPhA), will close its doors on April 2 and head to the state capitol in Sacramento to demand fee reductions and passage of SB 699, the pharmacy normalization bill, which includes PBM audits.
To that end, the KAPA held an emergency meeting in LA Koreatown on March 18 to confirm the Korean-American pharmacists who will be heading the Sacramento and to discuss how to respond to the current situation.
According to the KAPA, 20 Korean pharmacies will close their doors and travel to Sacramento to meet with lawmakers to convey the plight of the Korean pharmacy industry and demand the passing of the bill. More than 100 Korean-American pharmacies that are unable to participate on the day will show their support by closing for half a day or two to three hours.
“In the early days, PBMs would negotiate drug prices with manufacturers and pass the savings on to pharmacies and patients, and they would charge a 3-5% fee for processing prescription claims,” said Martin Kim, president of the KAPA. “But now they are unilaterally charging 25% to 30%, making it difficult for us to operate.”
According to drug prices disclosed by PBMs, Mounjaro 2.5 mg, which controls blood sugar levels in diabetics, costs $1,052, but the PBM charges $1,031. Albuterol Inhaler for asthma patients is unilaterally paid only $12.13, which is $1.17 less than the cost ($13.30).
“We have a list of 200 prescription drugs that are paid less than the cost,” Kim said. The more drugs we sell, the bigger the deficit. There is a growing sense of crisis among Korean-American pharmacies that they will have to close their doors if they continue to do this.”
“If they close, it will be difficult for seniors in the area to receive proper prescription drug guidance in Korean, and they will have no choice but to be prescribed cheaper drugs instead of more appropriate ones,” said Changho Yoo, KAPA’s chairman of the board.
In a recent position paper, the KAPA said, “PBMs are not fully disclosing the reasons for fee increases. While their fee revenue has increased, there hasn’t been a government audit of how they operate in decades,” the association said in a recent position paper, calling on the state government to audit and pass legislation.
PBMs were created in the 1960s to help pharmacies process prescription drug claims, and while they were initially small, mergers and consolidations since 2005 have given them a powerful influence over drug price negotiations.
Today, the three largest PBMs in the country – CVS Caremark, Express Scripts, and OptumRx – manage more than 180 million patients, accounting for 76% of the total market. Large health insurers Cigna, Humana, and UnitedHealthcare also operate their own PBMs and manage prescription drugs.
BY NICOLE CHANG, HOONSIK WOO [chang.nicole@koreadaily.com]
