PBMs AND DRUG PRICES: A REALITY CHECK — There’s a big target on the backs of pharmacy benefits managers lately with both the drug industry and HHS drawing attention to the role they play in the pricing of medicines. Pending at OMB is a rule that could dramatically reshape PBMs by changing the practice of drug rebating — the discounts that PBMs negotiate with pharmaceutical companies — with the aim of ultimately lowering the cost of drugs.
Because the PBMs can retain a portion of the rebate as profit, they may have a perverse incentive to favor higher-cost medicines with larger rebates in their insurance plan formularies, leading drugmakers to raise prices on brand medicines, HHS Secretary Alex Azar has said.
But a new analysis sheds light into how little of U.S. drug spending might be addressed by overhauling rebates. That’s because most of the money spent on pharmaceuticals in this country goes to drug companies — not middlemen like PBMs, wholesalers, pharmacies, insurers or doctors.
Written by Sarah Owermohle
