Pharmacy Benefit Managers

PBMs’ slim profit margins may be strongly influenced by their accounting practices, and widespread industry consolidation has made it more difficult to assess profitability.

Implementation of the IRA’s out-of-pocket cap incentivized plans to increase beneficiary exposure to cost sharing prior to reaching that limit.

Growing evidence shows that U.S. consumers often overpay for generics as pharmacy benefit managers game opaque and arcane pricing practices to pad profits.

If cost-sharing were based on net price it would provide meaningful financial relief to many Part D beneficiaries.

Drug rebates and list prices are positively correlated: On average, a $1 increase in rebates is associated with a $1.17 increase in list price.

Broad formulary exclusions of specialty drugs may make it harder for chronic disease patients to get the treatment that works best for them

Reforming payments to pharmacy middlemen could lower annual U.S. drug spending by nearly $100 billion.

The share of stand-alone prescription drug plans using coinsurance for preferred brand name drugs surged in recent years, exposing more patients to list prices that are often artificially inflated.

Part D plans became significantly more restrictive over time, rising from an average of 31.9 percent of compounds restricted in 2011 to 44.4 percent restricted in 2020.

A few pharmacy benefit managers dominate each of the payer markets, and the three biggest PBMs appear to be targeting different markets.

Congress and regulators at last are converging on a practical, market-based response to align PBMs’ incentives with employers and patients.

As policymakers consider reforms to the prescription drug supply chain, they should keep five principles in mind to ensure better outcomes for patients.

The lack of transparency and inability of plan sponsors to assess how much pharmacy benefit managers generate in savings and how much they retain for themselves is the root issue.

Drug costs can be driven down if market forces are allowed to target those profits, but first everyone needs to know what is being charged, and by whom to whom.

Eliminating insurance for generics might make patients nervous at first, but the payoff would be stable and affordable prices.