Press Release: 2025-03-12 00:00:00

Chamber Supports Mayor’s Request for Prescription Benefit Management Report

 

FOR IMMEDIATE RELEASE- March 11, 2025

 Chamber Supports Mayor’s Request for Prescription Benefit Management Report

WORCESTER, MA- At tonight’s City Council Meeting, Mayor Joseph M. Petty has filed an order requesting a report (10F) concerning the current Prescription Benefit Management arrangement for the City of Worcester and what steps are currently being utilized to review claims to ensure the best practices are being implemented to control costs for medication benefits.

10F.) Request City Manager provide City Council with a report concerning the current Prescription Benefit Management (PBM) arrangement and what steps are currently being utilized to review claims to ensure best practices are being implemented to control costs for medication benefits, such as for generics, bulk discounts, etc. (Petty)

Considering this order, the Worcester Regional Chamber of Commerce would like to provide our members with some background information on what Prescription Benefit Managers (PBM) are and the need for PBM reform.

PBMs are third-party companies that were originally intended to lower drug costs by negotiating with drug manufacturers and insurance companies. They act as intermediaries between insurers, pharmacies, and drug manufacturers to try to control drug costs, ensure medication access, and administer pharmacy benefits efficiently.

The PBM arrangement referred to in the Mayor’s order are to the contracts and services that PBMs provide to health plans, employers, and government programs to manage prescription drug benefits. The City of Worcester provides prescription drug coverage to its employees and retirees through various health insurance plans.

However, PBMs are in urgent need of reform as their business practices have negatively impacted access to affordable medications thus raising the cost of prescriptions for everyone. A 2024 report from the U.S. Fair Trade Commission found that PBMs charge significant markups for cancer, HIV, and other critical specialty generic drugs. The report pointed out that the “Big 3” PBMs—Caremark, Express Scripts, and OptumRx, which control 80% of the market, imposed price markups of hundreds of thousands of percent on specialty generic drugs, allowing them to reap massive revenue gains.

The FTC report also conveyed that PBMs often charge health plans more for a medication than they reimburse pharmacies, keeping the difference as profit. This practice has led to significant overcharges, particularly for state Medicaid programs. According to the report, PBMs made an additional $1.4 billion through spread pricing, charging insurers more than they reimbursed. Further in keeping with high profits, the report pointed out that PBMs funneled high-markup drugs to their own affiliated pharmacies, limiting access for independent pharmacies and steering profitable prescriptions for their own benefit.

Lastly, these negative business practices have increased healthcare spending as well as costs for patients and plan sponsors to access these drugs. The FTC report highlighted that plan sponsors spent $4.8 billion on specialty generics in 2021, while patient cost-sharing reached $297 million. Furthermore, spending on these drugs rose by 21% annually for commercial claims and 14%-15% for Medicare Part D claims.

The Chamber commends the Mayor’s action in requesting a report on the current PBM arrangement and the steps being taken to ensure that the best practices in cost control are being followed. In doing so, we protect the interest of Worcester’s business and residential taxpayers. Mayor Petty’s request as to whether the City of Worcester’s PBM contract is truly serving the best interests of its employees and retirees.

 

ABOUT THE WORCESTER CHAMBER

The Worcester Regional Chamber of Commerce is the largest Chamber in New England representing over 2,000 members from all industries and of all sizes located in a service area of over 40 cities and towns and other communities in Central Mass. and beyond. The organization serves the region’s business community through public policy advocacy, educational and networking events, and economic development efforts. Worcester’s affiliates are Auburn, Blackstone Valley, Central Mass. South, Clinton Area, LABO, Wachusett Area, and Webster Dudley Oxford. For more info, visit: https://www.worcesterchamber.org.