PBM Practices Under Fire: Are Patients Paying the Price?

Pharmacy-benefit managers (PBMs) are directing patients towards more expensive medications and restricting their options for obtaining them, as outlined in a recent report from the House Committee on Oversight and Accountability. This report follows a comprehensive 32-month investigation and precedes a hearing featuring executives from the nation’s largest PBM companies.

PBMs act as third-party administrators for prescription drug plans provided by health insurers, negotiating costs with pharmaceutical companies and determining patients’ out-of-pocket expenses. The three largest PBMs in the U.S.—Express Scripts, UnitedHealth Group’s OptumRx, and CVS Health’s Caremark—manage around 80% of the nation’s prescriptions.

The report highlights that PBMs often promote preferred drug lists that favor pricier brand-name medications over more affordable options. Within the report, communications from Cigna staff are cited that advised against using cheaper alternatives to Humira, a drug for arthritis costing about $90,000 annually, despite the availability of a biosimilar for half the cost.

Moreover, Express Scripts allegedly informed patients that filling prescriptions at local pharmacies would result in higher costs compared to obtaining a three-month supply via its affiliated mail-order service, thus limiting pharmacy choices for patients.

Earlier this month, the U.S. Federal Trade Commission (FTC) released a similar report, noting that heightened vertical integration has enabled the six largest PBMs to manage approximately 95% of all prescriptions in the United States. The FTC expressed concern that the dominant position of these PBMs enables them to significantly impact Americans’ access to and affordability of prescription drugs. The report suggests that this vertical integration may lead to a preference for affiliated businesses, creating conflicts of interest that could hurt independent pharmacies and raise drug costs.

FTC Chair Lina M. Khan remarked that these findings indicate that PBMs are “overcharging patients for cancer drugs,” resulting in excess revenue surpassing $1 billion for these middlemen.

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