It’s time to regulate PBM’s

  • PBMs often portray themselves as fighting the “good fight” on behalf of employers and employees.
  • In reality, they are highly profitable intermediaries that typically do not take possession of the drug, bear little to no risk, and minimally innovate.
  • PBM profit margins are much higher than other players in the supply chain who bear much of the public’s anger over rising drug prices.
  • Express Scripts for example, one of the largest PBMs, reported gross profits of $8.76 billion in 2017.

Today three PBMs dominate the national market: Express Scripts, CVS Caremark, and OptumRx. While their size means greater negotiating power with drugmakers, it also limits the options of their employer clients, and enabled PBMs to carve out a larger share of drug industry revenues.  Because rebates and profits might be higher with brand drugs, PBMs could require members to use their insurance to buy them instead of cheaper generic versions.

Adding to the problem a recent study indicated that insurance copays are higher than the cost of the drug about 25 percent of the time, according to a study published in March by the University of Southern California’s Schaeffer Center for Health Policy and Economics.

Inflated copays could be explained by the role in the pharma supply chain played by PBMs. Pharmacy benefit managers usually take a cut of the rebate and then pass them on to the insurer. Insurers say they use the money to lower costs for patients.

Surely there has to be a better way

PBM’s are definitely part of the problem with high Rx drug costs, but in this age of disruption there has to be a better way to cut the aft between drug makers and patients.  Amazon took a look at the mess and backed off so it’s going to take someone who understand the business and sees that the money being made by PBM’s is outrageous.

Of course PBM profits don’t let pharma off the hook when it comes to pricing, but to patients it’s all the same “system”.  Trump isn’t going to do anything nor is his crony from Lilly.  The changes coming will be made at the ballot box and PBM’s and pharma won’t like it.

 

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