Pharmacy benefit managers, or PBMs, have been in the political hot seat for a couple of years now—and for good reason.
“Every day PBMs get in the way of treating my cancer patients,” said Miriam Atkins, M.D., FACP AO Multispecialty Clinic President, Community Oncology Alliance during a May 23 hearing on PBMs on the Hill. “Every day I have to fight the faceless corporation who doesn’t do what I do, doesn’t understand what I do, and really doesn’t care.”
“They try to tell me how to take care of my patients, and what drugs I can and cannot use,” she explained to the House Committee on Oversight and Accountability. “They take prescriptions from my patients and delay their care.”
PBMs have historically acted as the middlemen between insurers and drug manufacturers, negotiating prices in exchange for including drugs in insurers’ formularies. But while PBMs are supposed to pass the savings to patients, PBMs—often working hand-in-hand with insurance companies that own them—instead pocket the discounts, leaving patients to foot the bill.
Biotech industry urges action on PBMs
“While the concept was designed to help people save money, the reality is that the largest 6 PBMs control almost 96% of the PBM market,” says the Biotechnology Innovation Organization (BIO).
BIO recently launched a PBM action campaign, to help biotech companies urge their lawmakers to hold PBMs accountable.
“The largest 3 (Optum, Express Scripts, and CVS Caremark) themselves control 80% of that market. This gives PBMs inordinate power to set prices, deny coverage, and pad their bottom line instead of passing the savings along to people who need medicine,” explains BIO.
“The messed up insurance system in the U.S. has put many people in what they call a high deductible health plan,” Dan Durham, Senior Health Policy Advisor and Executive Vice President for Health Policy at BIO, explained in April 2022. “Over 50% of the insured have a deductible over $1,500. So, if you haven’t reached your deductible yet, you go to the pharmacy counter. They’re going to charge you $1,000–the full list price for that drug.”
“And after your deductible, then you are on the hook for what insurers call co-insurance, which is either copay on the drug which is a flat dollar amount, or co-insurance which is a percentage,” continues Durham. “If you’ve already met your deductible, now you go in to buy that drug that is still listed at $1,000. And it has a 50% coinsurance. Your cost is still based off the list price, not the negotiated price. So. your 50% co-insurance is $500.”
“That’s exactly what the plan paid: $500.”
PBMs have become a policy priority
As a result of these stark disparities, PBMs have gone from a largely unknown entity to a major political priority in the last couple years, even becoming an overwhelmingly bipartisan issue on the Hill.
To date, there have been countless hearings in both the House and the Senate, inquiries and investigations instigated by a number of politicians and civil service offices, and a variety of bills drafted and marked up to increase PBM accountability and decrease their opaque operating methods.
Yet, the challenges with PBMs are still largely unknown in the general electorate, and still under-reported by media. This muddies the waters around the conversation on healthcare affordability.
As we round out the year and head into 2024, PBM reform will continue to gain steam inside and outside of the political arena. It is also time for the conversation around PBMs, as well as the power to reform them, to be put back in patients’ hands through education and engagement.
Click here to learn more about BIO’s PBM action campaign and how you can contact your lawmaker.
