PBMs Continue to Lose Health Policy Debate Surrounding Rising Costs, Pricing Transparency

DATE: May 18, 2017

Latest Study in Public Domain Finds PBMs Can Add Costs to Consumers, Nation’s Healthcare System

Washington, DC — The Senior Care Pharmacy Coalition (SCPC) today said Pharmacy Benefit Managers (PBMS) continue to lose ground surrounding the public debate on culpability for rising drug prices, and the need for significantly more drug pricing transparency along the nation’s pharmaceutical supply chain.

The latest study receiving attention in the health policy community is from the Pacific Research Institute (PRI), which details how PBMs can trigger higher patient co-pays and add costs to the nation’s healthcare system, among other negative findings.

“Yet another week is going by in which PBMs find themselves on the wrong end of the discussion surrounding culpability for rising drug prices — and how their opaque, unaccountable pricing practices urgently require congressional attention,” said Alan G. Rosenbloom, President of SCPC, commenting on the PRI paper.

Due to inefficiencies in the current regulatory framework, PBMs can add costs to the healthcare system and impose burdens on both consumers and market competition, according to Dr. Wayne Winegarden, PRI’s Senior Fellow in Business and Economics.

PBMs — essentially middlemen who process prescription transactions, negotiate drug discounts and manage the drug formularies for health plans — exacerbate problems with adverse market incentives, which are baked into the current system, the report says.

Among Winegarden’s key findings:

• PBMs have an undue influence over the medicines that patients can access;
• PBMs provide incentives for higher list prices for medications that come with large rebates and discounts; and
• PBMs trigger higher patient co-pays than necessary given the large discrepancy between list prices and the prices people pay at the counter.

Rosenbloom said the nation’s three major PBMs — Express Scripts, CVS Caremark and Optum Rx — “are essentially an oligopoly, and control more than 80 percent of prescription medications dispensed to patients in long-term care facilities.” Further, he said, the companies are consolidated and integrated — as each PBM is owned by, or has a shared parent company aligned with an insurer, large retail, specialty or LTC pharmacy chain, or mail-order pharmacy.

“PBMs don’t just negotiate drug benefits — they also own and control a large part of the supply and distribution chain — creating an obvious and glaring conflict of interest,” he concluded.

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The SCPC is the national association for independent LTC pharmacies. Our member pharmacies provide care and services to patients in LTC facilities in across the country occupying approximately 675,000 beds across the country.  Visit us at www.seniorcarepharmacies.org to learn more.