If you’re unfamiliar with the term, you might think “pharmacy benefit manager” is a job title for some anonymous mid-level health insurance executive. Like, say, the guy pictured above. But no, a pharmacy benefit manager is a corporation that sticks its big fat nose into the middle of America’s misbegotten prescription drug system and snorts up all the loose cash it can.

That’s my definition anyway. If you’re a high-priced lobbyist for the national PBM trade association, things look a little different. “Pharmacy benefit managers exist for one purpose: to drive down cost of prescription drugs,” said Sam Hallemeier of the Pharmaceutical Care Management Association (PCMA). PBMs, he continued, “reduce costs for insurers and consumers, reduce waste, and improve patient care.”

Wow, I hadn’t realized that PBMs are charitable enterprises that simply want to make the world a better place.

Oh wait, they’re not. The PBM marketplace is dominated by three large firms that are owned by three of America’s largest for-profit health care firms: Caremark, operated by drugstore chain CVS; Express Scripts, operated by insurance giant Cigna; and OptumRx, brought to you by insurance giant (and sworn foe of spaces between words) UnitedHealth. These mega-corporations are in business to make profits. If their PBMs are holding down costs, you can bet your life they’re doing it for their own benefit, not yours or mine.

You may wonder when I’m going to get to the Vermont political point of this. Well, the Legislature is considering a bill, H.233, that would impose substantial new restrictions on PBMs. And while our state has a track record of disappointment when it comes to health care, this thing might actually stick.

There are two reasons for cautious optimism. Last year the Legislature punted on a similar regulatory bill and instead settled for, that’s right, a study of the issue. That study was conducted by the Vermont Department of Financial Regulation, and its report (downloadable here) was pretty forthright on the need for tougher oversight of PBMs.

It called for state licensure of PBMs. It said the Legislature might consider a ban on deceptive advertising and marketing, and limits on a profitable practice known as “spread pricing.” PBMs contract with health insurers to manage prescription drug benefits. Spread pricing is when a PBM keeps a portion of drug payments made by insurers instead of passing along the payments to dispensing pharmacies. It’s a little hard to visualize; think of it as a middleman taking his cut off the top.

Spread pricing can be a perfectly good way for PBMs to be paid for services rendered, but DFR slammed “the opacity of the pricing system… [in which] neither the health plan nor the pharmacy knows what the other side was paid or charged.” (One lawmaker referred to PBM pricing as a “black box.”)

Anyway, point is, DFR found ample grounds for tightening the screws on PBMs.

The second reason for optimism came in the testimony from corporate lobbyists. They depicted their industry in positive terms, to be sure, but their criticism of H.233 was surprisingly muted. Steven Larrabee, representing CVS, didn’t oppose licensure; he only wanted PBMs “to be treated equally to other entities… with comparable fees, penalties, and processes.” When Rep. Mari Cordes, member of House Health Care and lead sponsor of H.233, asked Hallemeier if any PBM had stopped doing business in any state that imposed a licensing requirement, all he could say was “Not aware of any due to legislation.”

Also, none of the corporate lobbyists opposed a ban on spread pricing that’s included in H.233; they merely offered generic defenses of PBM pricing practices.

Those practices have had a devastating effect on independent pharmacies which, given the fact that the biggest single PBM is operated by the biggest single drugstore chain, might be seen as a decidedly beneficial consequence for its parent firm. Cordes pointed out that Vermont has lost 75% of its independent pharmacies due, in part, to PBMs reaping big profits while tightening the screws on the indies.

In fact, H.233 got more blowback from Sara Teachout, lobbyist for Blue Cross Blue Shield of Vermont, than from the tailored-suit crowd. She said the Blues are “neutral on licensing” and oppose a spread pricing ban because it would force renegotiation of PBM contracts and might possibly, maybe, conceivably lead to higher drug costs.

You’d think the Blues would be at least as concerned about PBMs taking advantage of the opacity and centrality of their operations to actually increase costs, but Teachout was focused more on the risks of change than the flaws of the system.

Prospects seem good for H.233 to clear House Health Care, but that’s just the beginning of the road. It will have to navigate the House money committees, the full House, Senate policy and money committees, and the full Senate before it can go to Gov. Phil Scott, and you never know what The King of the Vetoes will do. And as with anything in our tortuously complicated health care system, a myriad of interests are affected by H.233 and they will not be reluctant to weigh in.

Still, there is reason to believe that a pretty decent version of H.233 may well become law. Changes are a given in the legislative process, and they tend to weaken rather than strengthen bills, especially when so many different interests are affected. But it’s a good, robust effort with a fair degree of momentum behind it. Time will tell, but at this point the signs are positive.