By Sonya Frausto, PharmD

I wish I could say that my perspective is unique, but unfortunately, it is not. I spent years working at Rite Aid and later owned my own pharmacy, both of which were ultimately forced out of business because of the abusive practices of pharmacy benefit managers (PBMs). PBMs are the middlemen deciding which medicines your insurance will cover and how much pharmacies are reimbursed for the medicines, giving them enormous control over the prices patients pay at the pharmacy counter.

Locally owned pharmacies, once a place where patients could reliably turn for medications and trusted care, have been decimated throughout the state as a result of PBMs’ chokehold over the prescription drug marketplace. These closures aren’t abstract; they affect real patients, real families, and real businesses.

While rising drug prices are often blamed on pharmaceutical manufacturers, PBMs play a critical and often overlooked role in driving up costs. Today, just three companies (CVS Caremark, Express Scripts, and OptumRx) control nearly 80% of the PBM market. What’s worse, each of these companies are closely tied to major insurers and own their own pharmacies. That concentration creates a conflict of interest and a system where independent pharmacies are squeezed until they can no longer survive. For patients, this concentration has forced many into using mail-order pharmacies, which may seem easier but are typically far more confusing than picking up your prescription at the pharmacy down the street.

While PBMs may argue that they bring drug prices down, independent studies and federal investigations tell a very different story. The Federal Trade Commission (FTC), in its ongoing inquiry into PBMs, has found mounting evidence that PBMs are not reducing costs but instead increasing them, even for lifesaving cancer drugs. The FTC also found that PBMs have pushed independent pharmacies, like mine, out of business, and reduced competition in the marketplace, making it harder for small businesses to provide reliable health care coverage to their employees.

It’s for these reasons, and more, that pharmacists and patients across the country are working to reform PBMs’ business practices. In California, specifically, we are supporting Senate Bill 41, which prohibits PBMs from forcing patients to only use their affiliated pharmacies and bans deceptive practices like “spread pricing,” where PBMs charge a pharmacy more than the price they paid for a medication. SB 41 will also ensure that any savings negotiated with drug companies are actually passed on to patients, rather than pocketed by the PBMs. In short, the measure restores transparency and fairness in a system that has been tilted against patients and local pharmacies for far too long.

Some opponents frame SB 41 as a threat to patients or small businesses, but much of the opposition comes from executives whose financial interests are tied to PBMs rather than the communities these pharmacies serve. Take CVS for example. It is both a pharmacy chain and a PBM, which exemplifies the dynamic I mentioned above. Its business model benefits when independent pharmacies are pushed out and patients are steered toward PBM-owned pharmacies, rather than lowering costs or supporting local businesses. On the other hand, a PBM like Costco Health Solutions already complies with most of the provisions in SB 41. Unveiled in 2013, CHS has never once engaged in spread pricing and, in fact, is transparent about how they pass through all savings back to employers.

SB 41 is about reforming the bad actors. Once signed into law, PBMs will go back to their original role of negotiating lower costs for pharmacies and patients – not driving up costs like they have been for years. The consequences of inaction are devastating. From FY 2023–24 to today, more than 700 pharmacies have closed in California—many of them independent community pharmacies that serve as lifelines in rural and underserved areas. These closures are not accidental. They are the direct result of PBM reimbursement practices that underpay local pharmacies, threatening both community health and local economies.

Governor Newsom has a chance to stand with patients, small businesses, and community pharmacies by signing SB 41 into law. This bill isn’t about limiting access—it’s about restoring fairness, transparency, and competition in a market that PBMs have rigged for their own benefit.

California cannot afford to let PBMs write the narrative on affordability. The facts are clear: PBMs are making drugs more expensive, not less. SB 41 is the reform we need to protect access, preserve competition, and put patients—not PBM profits—first.

Sonya Frausto is a pharmacist and former owner of Ten Acres Pharmacy in Sacramento.