Coachella Today

The head of a California health care reform group said a recent Federal Trade Commission (FTC) report showed how pharmacy benefit managers (PBMs) can increase the cost of health care in California.

“According to a study in 2024 by the California Healthcare Foundation, more than one-third of Californians (38%) have medical debt and a shocking 52% of low-income patients,” wrote Julie Gill Shuffield, executive director of Patients Come First-California (PCF-CA) in an op-ed in The Desert Sun. “I am not alone in worrying about the cost of health care in California as I am joined by 80% of my fellow Californians.” 

“Addressing financial impacts to patients is multifaceted but there is work being done to call out the bad actors,” wrote Gill Sheffield. “One such example is the bold move of the Federal Trade Commission’s interim report on Pharmacy Benefit Managers and their nefarious practices driving up prices and decreasing access to life-saving options.”

A PBM is a third-party administrator of prescription drug programs for health insurers, self-insured employers, and government agencies. PBMs negotiate with drug manufacturers to secure discounts and rebates on medications, manage pharmacy networks, and process prescription drug claims. PBMs also provide services such as medication therapy management and mail-order pharmacy services.

The FTC released a report in January that said the three largest PBMs have “hiked costs” for a range of prescription medications. The report is the second interim release in a study launched by the FTC in June 2022. It focuses on the role of PBMs in shaping drug pricing and access to prescription medications. 

One practice identified in the report is spread pricing, where PBMs charge health plans a higher price for a drug than they reimburse to pharmacies, keeping the difference as profit. This practice can result in increased costs for payers and patients, said the FTC report, while limiting the revenue for pharmacies. 

The report also said rebate agreements between PBMs and drug manufacturers incentivize higher list prices for medications. 

PBM fees and reimbursement rates, said the report, also threaten the financial stability of small pharmacies, reducing patient access to local providers of essential medications. Patients in these areas often face higher out-of-pocket costs and fewer options for obtaining the medications they need.

The FTC said it will use the report findings to develop policy recommendations and enforcement measures. Public comments on the report are encouraged and will inform the FTC’s ongoing efforts to evaluate the broader impact of PBM practices on drug prices and access.

Gill Sheffield has been executive director of PCF-CA since the organization's launch in March 2024. In addition to running her own firm, Sutter Buttes Advisors, Gill Sheffield also founded Power of 100 Sutter Buttes Basin, a charitable community women's group. She was named Woman of the Year by U.S. Rep. John Garamendi (D-Fairfield) in 2019. Gill Shuffield also previously worked as director of regulatory and government affairs at AES Corporation and in external affairs for California ISO.