Putting patients first: Workers suffer when their employers lack critical information about PBMs

This is the fifth in a series of Bio.News articles looking at the need for pharmacy benefit manager reform through the lens of the patient. Middlemen too often act in ways that pad their bottom line, but this is not simply a narrative about how money is diverted into PBM coffers. Examining the larger story about the ways that patients are left vulnerable is critical in understanding why changes are required

Patients do not, in general, “choose” their PBM. They pick their employer, and that employer gets to select the PBM. So a patient’s experience depends heavily on the PBM that that their employer picks.

Therefore, it’s vital that employers have all the information they need to make a smart choice for their workers. But far too often, America’s employers are kept in the dark:

• The KFF Employer Health Benefits Survey asked employers if they knew how much of the rebates collected by their PBM they received back. Rebates are a key part of the financial arrangement between employers and PBMs, yet more than one in three respondents to the KFF survey said they didn’t know, a clear sign of an opaque market.
• The National Alliance of Healthcare Purchaser Coalitions also surveyed employers on what they wanted out of their PBM. While a majority said they wanted “full disclosure of all revenue streams with affiliated pharmacy-related entities,” only a quarter of the employers polled said they had that level of access right now.

These are not new concerns, yet issues with transparency persist. That suggests that congressional reforms are needed to ensure that the highly concentrated PBM industry doesn’t deprive their commercial partners—employers—of the information they need to make the right decisions for patients.

• Nearly all of the bills that have passed congressional committees or are under consideration have transparency provisions, most of which are designed to ensure that employers have access to the data they need to do right by their workers.
• The House-passed Lower Costs, More Transparency Act includes transparency provisions that the Congressional Budget Office suggests could save $2 billion by forcing PBMs to disclose rebates and discounts, making clear the true costs of prescription drugs.

BIO’s View: PBMs are a black box, generating billions every year in profits for the big insurance companies that own them. OptumRx, for instance, has booked more than $1 billion in earnings from operations for 10 consecutive quarters. Yet where those dollars come from remains a mystery, even to the business partners who entrust the financial and physical health of their employees to those PBMs. Injecting more transparency into the system is the least that reform legislation can do, but such an effort is critical to unlocking competition and true choice for employers, not to mention helping patients.