PBMs Under Fire: Are Patients Paying More for Less?

Pharmacy-benefit managers (PBMs) are reportedly directing patients towards pricier medications while restricting their pharmacy options, according to a recent report from the House Committee on Oversight and Accountability.

The Wall Street Journal reviewed the report following a 32-month investigation by the committee, in anticipation of a hearing featuring executives from the largest PBMs in the country.

PBMs function as third-party administrators for prescription drug plans on behalf of health insurers. They negotiate the prices that health plans pay for medications and determine out-of-pocket expenses for patients.

The three major PBMs—Express Scripts, OptumRx (associated with UnitedHealth Group), and Caremark (part of CVS Health)—account for about 80% of all U.S. prescriptions.

The committee’s findings indicate that PBMs are favoring higher-priced brand-name drugs over more affordable alternatives on their preferred drug lists. For instance, the report highlighted communications from Cigna employees discouraging the use of cheaper alternatives to Humira, a medication that costs $90,000 annually, despite the existence of a biosimilar priced at approximately half that amount.

Additionally, the committee reported that Express Scripts informed patients they would incur higher costs by using their local pharmacies compared to obtaining a three-month supply through its affiliated mail-order service. This maneuver effectively limited patients’ pharmacy choices.

Further corroborating these findings, the U.S. Federal Trade Commission (FTC) released a report earlier this month, noting that escalating vertical integration and industry consolidation have allowed the six largest PBMs to manage nearly 95% of all prescriptions in the nation.

The FTC reported concerning implications, stating that “dominant PBMs now wield considerable influence over Americans’ access to and affordability of prescription medications.” This dynamic fosters a landscape where “vertically integrated PBMs have the means and motivation to favor their own affiliated businesses, leading to potential conflicts of interest that may disadvantage independent pharmacies and escalate drug costs.”

FTC Chair Lina M. Khan remarked that the findings point to a troubling situation in which these intermediaries are “overcharging patients for cancer drugs,” resulting in an additional revenue generation of over $1 billion.

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