PBMs Under Fire: Are Patients Paying the Price?

A recent report from the House Committee on Oversight and Accountability reveals that pharmacy-benefit managers (PBMs) are guiding patients towards pricier medications while restricting access to various pharmacies. This finding comes after a 32-month investigation ahead of a hearing featuring executives from some of the largest PBMs in the country.

PBMs serve as third-party administrators for prescription drug plans affiliated with health insurers. They negotiate prices with pharmaceutical companies and also determine patients’ out-of-pocket expenses. The three dominant PBMs in the U.S.—Express Scripts, UnitedHealth Group’s OptumRx, and CVS Health’s Caremark—control around 80% of prescriptions.

The committee’s report indicates that these PBMs maintain lists of preferred drugs skewed towards expensive brand-name medications instead of more affordable alternatives. An example highlighted involves Cigna’s internal communications which discouraged the use of cheaper substitutes for Humira, a medication for arthritis and autoimmune disorders that was priced at $90,000 annually, even though a biosimilar was available for around half that cost.

Further, Express Scripts allegedly informed patients that they would incur higher costs by filling prescriptions at their local pharmacies compared to using its affiliated mail-order service. This practice reportedly limits patients’ pharmacy options.

A similar report was released earlier this month by the U.S. Federal Trade Commission (FTC), which noted that increasing vertical integration among PBMs allows the six largest companies to manage nearly 95% of U.S. prescriptions. The findings raise concerns about the substantial power PBMs hold over the accessibility and affordability of prescription drugs for Americans. The FTC emphasized that this system can result in biases toward their own affiliated businesses, potentially harming independent pharmacies and driving up drug prices.

FTC Chair Lina M. Khan commented that these developments indicate that PBMs are “overcharging patients for cancer drugs,” leading to over $1 billion in additional revenue for these intermediaries.

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