Pressure Ratchets Up Against Pharmacy Benefit Managers
If you think the price of your prescription drugs has increased, you’re not alone. While some of this can be attributed to inflation and other external factors, pharmacy benefit managers (PBMs) are increasingly blamed. The criticism lies in the potential for PBMs to profit from the difference between what they charge plan sponsors and what they pay pharmacies and drug makers. The PBM profit model suggests they may not always act in the best interest of plan sponsors or consumers, as they’re incented to maximize the spread between these payments rather than pass on the full savings.
PBMs were originally formed to help health insurers and self-funded health plans save money on prescription drugs and improve patient health through clinically based care management programs. However, as reported in The New York Times on June 21, 2024, “[PBMs] frequently do the opposite. They steer patients toward pricier drugs, charge steep markups on what would otherwise be inexpensive medicines and extract billions of dollars in hidden fees.”
Prescriptions for more than 200 million Americans across the nation are controlled by the three largest PBMs, which are owned by huge healthcare conglomerates like CVS Health, Cigna and UnitedHealth Group. Instead of acting as consumer advocates, they are hired by health plans and governments to increase profits for their shareholders. The lack of transparency and the constantly evolving market make it imperative for plan sponsors to consistently evaluate their contracts to ensure they remain competitive.
Some of the New York Times’ most alarming findings include:
- PBMs often charge health plans and government programs like Medicare multiple times for the wholesale price of a drug, keeping the difference for themselves.
- The largest PBMs have established subsidiaries that harvest billions of dollars in fees from drug companies, which flows straight to their bottom line and does not reduce health care costs for consumers.
- Independent drugstores are being driven out of business by PBMs, because they are not paying small drugstores enough to cover their costs. The disappearance of local pharmacies limit health care access for poorer communities but ultimately enriches the PBMs’ parent companies, which own larger drugstores or mail-order pharmacies.
At Bolton we recognize that there are often two sides to every story, and we make a concerted effort to communicate any rebuttals and opinions we believe are relevant. As the healthcare industry continues to change every day, Bolton can help organizations nationwide analyze their healthcare plans to ensure that participants are able to receive the care they and their families need. Transparency in healthcare will not only expose deceptive practices but will ultimately drive positive change in healthcare nationwide.
Visit boltonusa.com for more information on how we can help.
