Pharmacy benefit managers profit at the expense of consumers and payers, PBM Accountability Group blamed for new report.
“Over time, PBMs have found ways to take advantage of a lack of transparency and oversight to increase their profits,” said Sally Greenberg, executive director of the National Consumers League. “This report not only shows the many ways they operate, but also how much money they make from these tactics. We need to find political solutions to get that money – those savings – back to consumers as planned. “
According to the report, between 2017 and 2019:
- PBM’s gross profits rose 12% from $ 25 billion to $ 28 billion.
- Gross profits at the mail-order and specialty pharmacies owned by PBM increased by more than 13%, from $ 8.9 billion to $ 10.1 billion.
- Gross profits from other sources, including price differentials, pharmacy fees and recoveries, fees collected from payers, and other non-administrative fees collected from manufacturers increased by almost 26% from from $ 8.5 billion to $ 10.7 billion.
The report discusses market dynamics and misaligned incentives that the organization says have resulted in system-wide inefficiencies and allowed PBMs to increase costs for patients, employers and the wider community. health system. PBMs benefit directly from the growth in list prices of prescription drugs, resulting in misaligned incentives in the system. Several sources of PBM revenue for drugs are directly linked to the list price of the drug. When the list price of a drug increases, the PBM often receives more revenue. These misaligned incentives can increase costs for plans and patients.
“With PBMs being essentially the center of the drug supply chain in the United States, it requires careful consideration of how their business practices can exacerbate drug dysfunction and price overruns,” said Antonio Ciaccia, Chairman of 3 Axis Advisors. “As PBMs claim to be the only entity working to control drug prices, we believe analyzes like this report can shed light on the incentives and opportunities available to PBMs to inflate costs rather than providing savings to consumers. plan sponsors and patients. “
The excessive complexity and asymmetry of market information make it difficult for payers and patients to properly assess PBM decisions or drug costs. The complexity of pricing and lack of transparency allows PBMs to buy products or services from one stakeholder in the system and sell the same products or services to other stakeholders at higher prices, without the payer understand the true cost or inflationary nature of the services purchased.
” In this context, PBM continue to operate under a cloak of relative secrecy, ”Ciaccia added. “The report confirms much of our previous research: PBM Changing the sources of their income, they also find significant growth opportunities along the way – often at the expense of payers, health plans, pharmacies, patients and even manufacturers. For the future, we can expect that PBM“Revenue streams will continue to evolve in response to changing market dynamics. “
Finally, the absence of meaningful PBM industry standards, limited transparency, and lack of regulatory oversight enables PBM revenue growth. Many PBM contractual mechanisms and revenue sources lack agreed definitions, giving PBMs wide discretion to craft the terms of a complex contract in their favor.
“These findings underscore the need to consider new approaches to realign PBM incentive structures as part of prescription drug policy discussions,” the report concluded, “including unbundling of PBM compensation from list price of drugs, requiring that discounts and discounts be shared with plans and patients at the pharmacy counter, ensuring patient choice of pharmacies, limiting prices from spreading within Medicaid, and establishing disclosure requirements for employers and commercial health plans.