Drug Supply Chain & Pricing Reform:
Pharmacy Benefit Managers
Who are they?
In the face of the increased attention to the impossibly complex drug industry following the growing public outcry over rising drug costs, there is one industry player that has managed to stay in large part under the public’s radar: Pharmacy Benefit Managers (PBMs).
Acting as intermediaries between insurers, manufacturers, and pharmacies, PBMs play a uniquely central role in the prescription drug market, handling everything from negotiating prices with drug manufacturers and setting patient copay amounts to determining which drugs are covered by which insurers.
Yet, despite their undeniable significance, PBMs and their effect on drug costs have managed to go largely unnoticed by the vast majority of Americans, allowing them to quietly influence not only prices and ultimately the amount patients pay for their prescriptions, but also which drugs are available and accessible to the public.
Their place on the Fortune 500 listing best illustrates their enormous profit and related influence on the industry, supply chain, and market overall. Compare the placement of the top three PBMs to the top drug manufacturers.
2021 Fortune 500 List - Top 3 PBMs:
- CVS Health (Aetna & Caremark) #4
- UnitedHealth Group (OptumRX) #5
- Cigna (Express Scripts) #13
2021 Fortune 500 List - Top 3 drug manufactures:
- Johnson & Johnson (Janssen) #36
- Merck #65
- AbbVie #68
Why is this important?
The top 3 PBMs handled about 77% of all prescription claims in 2020, thus holding patients hostage with their unregulated bad practices. PBMs create access issues for patients, directing them to higher priced drugs that make the biggest profit for the PBM.
In doing so, patients pay the inflated list price for their prescription medications instead of the discounted price that is negotiated by PBMs. The rebate that is collected by the PBM is then pocketed. This is a continuous cycle that puts their profits over drug efficacy, safety, access, and affordability for patients.
What is CSRO doing about it?
Our organization believes there are several main points in policy solutions reforming PBMs.
- Creating policies that enforce true transparency, accountability, and oversight.
- Reduce costs for patients through rebate pass-through and other related mechanisms.
- Improve access for patients through utilization reforms and fair competition that drive prices lower.
To support those solutions, CSRO created the Alliance for Transparent and Affordable Prescriptions (ATAP) and is a steering member of the Coalition for PBM Reform. Outside of those groups, CSRO drives its own PBM reform campaigns through grassroots advocacy campaigns and our in-house expert, Dr. Madelaine Feldman. She has testified in numerous state and federal committee hearings as a leading expert in formulary construction, drug pricing reform, and the role PBMs play within the drug supply chain.
What can YOU do about it?
Visit our Legislative Map Tool to read about current PBM reform laws or legislation in your state. You can send letters in support of pending legislation and find educational materials.