The majority of the rebates received from drug manufacturers are kept by pharmacy benefit managers (PBMs), which do not use the funds to reduce the cost of prescription drugs for customers, says a new Drug Channels analysis. The Drug Channels Institute reviewed data from Texas, where PBMs must report rebates, fees, and payments from drug manufacturers.
PBMs, to put it simply, are the middlemen who decide what will be included in the formulary of pharmaceuticals covered by insurance. PBMs are frequently owned by insurers, as Bio.News has explained. PBMs seek rebates from pharmaceutical companies in return for formulary inclusion. In theory, these rebates are supposed to be passed along to patients and consumers, thereby reducing the cost of the drugs at the pharmacy counter, but the Drug Channels analysis shows this is not the case.
According to the analysis, payers got 80–90% of the money PBMs took in from medication manufacturers. Payers (typically insurers) assert that rebates are used to reduce rates, but the system lacks transparency.
Moreover, a previous Drug Channels analysis revealed that the majority of this money is utilized to defray payers’ expenses.
PBMs kept 13% more of the rebates than anticipated in 2021.
“For 2021, only $11.9 million (0.2%) out of $5.7 billion in manufacturer payments were shared as point-of-sale savings to plan beneficiaries” in Texas, Drug Channels’ Dr. Adam J. Fein explained.
Biotechnology Innovation Organization (BIO) President and CEO Dr. Michelle McMurry-Heath has called the PBM rebate scheme one of “the biggest drivers of out-of-pocket costs in our system.”
Ahead of drug price controls being passed by Congress, she said drug price control legislation that addressed PBMs instead “would have helped patients at the pharmacy counter.”
BIO supports proposed legislation to address PBMs and submitted comments on the issue to the Federal Trade Commission (FTC) earlier this year.