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PBM Issues

What are PBMs?

Pharmacy Benefit Managers (PBMs) are the administrators of an insurance plan's prescription drug benefit program. They contract with employers, unions, and insurance companies to administer prescription drug benefit programs, set compensation formulas for pharmacy payments, arrange and collect rebates from manufacturers, establish formularies (preferred drug lists), and determine patient co-payments.

 

 

What is the issue?

Initially established as administrative processors of prescription drug claims for health plans over time PBMs have transformed into major players in the prescription medication world.

 

Since 1987, when Advance PCS/Caremark (now CVSHealth) became the last of the original "big 3" PBMs to incorporate, the others being Medco and Express Scripts which merged in 2012, total prescription drug expenditures have skyrocketed 1010% and per capita expenditures have increased 756%.

 

SOURCE: http://www.ncpanet.org/advocacy/pbm-resources

 

PBMs manage pharmacy benefits for over 253 million Americans, according to their trade group. The three largest companies in the PBM industry - Express Scripts, CVS Caremark, and OptumRx - cover more than 180 million lives, or roughly 78% of the market.

 

As of 2016, the two largest PBMs - CVS Health and Express Scripts - rank on the Fortune 500 list with astonishing revenues of $178 billion and $100 billion respectively.

 

SOURCE: http://fortune.com/fortune500/list

 

According to a report by Applied Policy:

 

"Over the past decade, the role of PBMs in the delivery of health care has increased, due to a confluence of factors: coverage expansions under both the Medicare Part D prescription drug benefit and the Affordable Care Act, combined with an increase in prescription drug spending that has motivated commercial health plans and self-insured employers to outsource the management of their spending on outpatient prescription drugs."

 

And, per an article in The American Prospect:

 

"Over the past 30 years, PBMs have evolved from paper-pushers to significant controllers of the drug pricing system, a black box understood by almost no one. Lack of transparency, unjustifiable fees, and massive market consolidations have made PBMs among the most profitable corporations you’ve never heard about."

 

The lack of transparency in the largest PBMs and the lack of meaningful competition negatively affects patients, pharmacists, insurance plans, manufacturers, and ultimately taxpayers who fund government sponsored healthcare programs.

 

 

Videos on PBMs

 

 

 

 

Additional Information and Resources on PBMs

Take the Generic, Patients Are Told. Until They Are Not.

By Charles Ornstein and Katie Thomas

New York Times

August 6, 2017

 

Meet the Middlemen

National Community Pharmacists Association (NCPA)
 
The Real Story of PBMs
National Community Pharmacists Association (NCPA)
 
The Hidden Monopolies That Raise Drug Prices
By David Dayen

The America Prospect
March 28, 2017

MYTH/FACT on PBM Arguments Against Bipartisan MAC Legislation
By Kevin Schweers

National Community Pharmacists Association (NCPA)
March 13, 2017

Reform Pharmacy Benefit Managers (PBMs) To Improve Pharmaceutical Affordability
By Wayne Winegarden

Forbes
March 7, 2017

Drug Costs Too High? Fire the Middleman
By Neil Weinberg and Robert Langreth

Bloomberg
March 3, 2017

Watch Congress Vent About PBMs on the House Floor
Drug Channels
March 3, 2017

Former CEO of Nebraska Pharmaceutical Benefits Manager Guilty in Kickback Scheme
United States Justice Department
February 13, 2017
 
Here's how a $50 drug ends up costing you $700 in America's healthcare system
By Linette Lopez

Business Insider
October 21, 2016
 
How PBMs make the drug price problem worse
By David Balto

The Hill
August 31, 2016
 
Concerns Regarding the Pharmacy Benefit Management Industry
Applied Policy
November 2015
 
Do drug benefit managers reduce health costs?
By Jayne O'Donnell

USA Today
March 3, 2014
 
PBMs: Contributing to Higher Prescription Drug Costs
National Community Pharmacists Association (NCPA)
 
www.PBMabuses.com

 

 

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