PBMs and the price of prescription drugs
posted Mon, 11 Jul 2011Pharmacy Benefit Managers (PBMs) have been in the news a lot lately. PBMs are companies that have sprung up to help employers and insurance companies administer their prescription drug benefits. In theory, PBMs help control drug costs because they can purchase in bulk and are able to negotiate prices with big pharmaceutical companies. In practice, they seem to be driving up health care costs instead.
Unlike government entities that are allowed to negotiate drug prices, like the Department of Veteran's Affairs, PBMs don't pass on all of their savings to consumers. Instead, they have been raking in profits while consumers struggle to afford their needed medications.
PBMs have been accused of reporting higher prices than they actually paid for drugs as well as getting hefty rebates from drug manufacturers (again without passing on the savings to consumers). One doctor claims that PBMs cash in by convincing patients to take medicines that are less effective and more expensive.
The pharmacy benefit manager industry has paid $371 million over the last several years to different states in order to settle claims that they overcharged patients for prescription drugs.
In the midst of this budget crisis and as our nation's health care spending is being scrutinized, we at RxRights believe that our policy makers should be looking closer at the role of PBMs and evaluating their real impact on our overall health care costs.