Philly Leader

The head of the Philadelphia Association of Retail Druggists (PARD) said he supports the call by the National Community Pharmacists Association (NCPA) for the newly-created Department of Government Efficiency (DOGE) to search for waste and fraud within the pharmacy benefit management (PBM) industry.

"Let me just say that anything that looks at the PBMs to increase transparency and expose how they add costs to the system at the expense of patients and providers and pharmacies would be good," said Robert Frankil, executive director of PARD. 

"You know, it isn't like this is a new thing that Trump or Elon Musk invented the notion to look into the PBMs," said Franklin. "In fact, you know, the FTC under the Biden administration and the leadership of Lina Khan have exposed the PBMs significantly, they even filed a lawsuit against them."

Frankil's comments are in response to a December letter sent by NCPA CEO Douglas Hoey to DOGE General Counsel William McGinley.

“We were encouraged to hear that the newly formed Department of Government Efficiency (DOGE) will be looking at ways to eliminate waste and inefficiencies in federal programs,” said Hoey's letter. “We would strongly urge you to start your search with the pharmacy benefit managers (PBMs).”

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.

On January 20, 2025, President Donald Trump (R) established DOGE through an executive order, appointing Tesla founder Elon Musk as its sole leader after entrepreneur and former presidential candidate Vivek Ramaswamy's resignation. DOGE aims to reduce federal spending by up to $2 trillion, streamline government operations, and consolidate federal agencies from over 400 to fewer than 100. 

McGinley was appointed by Trump in December 2024 to be the general counsel of DOGE. McGinley has been a partner at the Holtzman Vogel law firm and also served as White House Cabinet Secretary in Trump’s first term. 

The Federal Trade Commission (FTC) released a report earlier this month 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.

Trump, during a December 2024 press conference, said PBMs are “middlemen” who contributed to higher drug prices

"The horrible middleman that makes more money, frankly, than the drug companies, and they don't do anything except they're a middleman,” said Trump. “I don't know who these middlemen are, but they are rich."

Frankil said "any effort to continue exposing the PBMs would be a good thing because they are definitely middlemen that have no real product."

"They're not providers," said Frankil. "They simply are in a position to control the network and exploit that to extract rebates and fees and force feed low reimbursing contracts to pharmacies. That is what they do."

Established in 1898, PARD represents independent pharmacy owners in Philadelphia. It advocates for its members on regulatory and legislative issues and operates the Keystone Pharmacy Purchasing Alliance to secure competitive pricing and services for independent pharmacies.