IN CASE YOU MISSED IT

What History Tells Us About Your Prescription Costs and the New ‘Bad Boys’ of Health Care

SACRAMENTO, CA – A recent opinion editorial in The Hill sheds light on the history of Pharmacy Benefit Managers (PBMs) and their role in today's health care system. With the ever-rising costs of health care, PBMs are often blamed for being the “bad boys” instead of appreciated for working to increase competition among Big Pharma and control costs. 

“PBMs are intermediaries trying to control healthcare costs while maintaining quality. History suggests that intermediaries are like the late comedian, Rodney Dangerfield: they get no respect – just the blame.

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“Just like many contracts between buyers and sellers in the private sector, PBM contracts are never publicly disclosed to encourage price discounting by manufacturers (and inhibit any collusion among them). This casts the whole transparency issue in a different light.

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“A core tactic in market competition is bargaining power. The historical narrative shows that PBMs amass purchasing volume to negotiate lower prices from drug manufacturers. 

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“PBM consolidation has helped them to negotiate lower input prices and keep annual net sales price growth for drugs in the low single digits (~3 percent) for beneficiaries. If one really wants to start pointing fingers at the biggest culprits in consolidation and rising cost, one does not have to look very far: “Big Med.”

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“Another core principle in economics — and a key to PBMs and the healthcare ecosystem — is tradeoffs. PBMs (in partnership with health plans) develop formulary tiers that allow plan participants to access the drug(s) they prefer at the cost they can afford.

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“PBMs get drug makers to compete on price and get pharmacies to reduce their fees. PBMs also compete with one another in terms of claim processing fees and a host of client services to get contracts with insurers and employers. They are, thus, pro-competitive. 

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“In sum, PBMs promote competition in healthcare and help to reduce prices.”

Read the full article here: The Hill

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About PCMA
The Pharmaceutical Care Management Association (PCMA) is the national association representing America’s pharmacy benefit managers (PBMs). PBMs administer prescription drug plans for more than 270 million Americans who have health insurance from a variety of sponsors including commercial health plans, self-insured employer plans, union plans, Medicare Part D plans, the Federal Employees Health Benefits Program (FEHBP), state government employee plans, managed Medicaid plans, and others.

PCMA continues to lead the effort in promoting PBMs and the proven tools they utilize, which are recognized by consumers, employers, policymakers, and others as key drivers in lowering prescription drug costs and increasing access.