What if PBM’s disappeared?

  • PBMs are primarily responsible for developing and maintaining the formulary, contracting with pharmacies, negotiating discounts and rebates with drug manufacturers, and processing and paying prescription drug claims.
  • While drug distributors convert 45% of their gross profit to EBITDA, and insurers and pharmacies around 30%, PBMs convert 85%.
  • Just three PBMs control eighty percent of the prescription market, driving enough revenue to put them way ahead of all drug manufacturers on the Fortune 500.
  • Express Scripts, by some estimates, the company’s profit per prescription has increased an average of 38% every year between 2003 and 2016. That kind of growth has landed Express Scripts at number 22 on the Fortune 500 list in 2017.

Let’s face it, healthcare costs in the US are increasing and unsustainable.  It seems, that when there is money to be made, everyone wants a piece of the pie.   Pharma has been pointing the finger at PBM’s via their lobbying arm PhRMA.  But what would happen if PBM’s were eliminated?

Imagine a benefits manager that came between you and your groceries.  They would decide which products appear at your store and at what price, but the price you pay would only partially go back to the brand.  Welcome to PBM’s.

If drug companies could set a lower price for their prescription drugs, without rebates, based on the projected OVERALL volume of the drug we wouldn’t need PBM’s to negotiate prices which patients never see.  If there was a system that could process drug claims automatically PBM’s wouldn’t be necessary.

What about formulary access?   Very simple actually. Drug companies would be responsible for demonstrating efficacy via a standardized clinical trial as mandated by the FDA.

OK. i know what you’re thinking as you read this. “You’re not living in the real world”! But I would respond that we have to be the change we need and want and that right now there is too much lobbying money to bring down the prices of prescription drugs.  We need drastic actions and we need to get pharma and PBM;obbying money OUT of politics.  Senators who earn well over 6 figure salaries don’t ever have to worry about healthcare costs but you and I do.

If we don’t start asking why not instead of how come we are doomed to continue to pay the highest healthcare costs in the world.

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