PBMs Under Fire: Are They Driving Up Drug Prices?

A recent report from the House Committee on Oversight and Accountability highlights that pharmacy-benefit managers (PBMs) are directing patients towards more costly medications and restricting access to where prescriptions can be filled.

The report, reviewed by the Wall Street Journal, follows a comprehensive 32-month investigation ahead of a hearing involving leaders from the largest PBMs in the country.

PBMs serve as third-party administrators of prescription drug plans for health insurers, negotiating prices with pharmaceutical companies on behalf of health plans. These managers also establish the out-of-pocket costs that patients face when filling their prescriptions.

According to the report, Express Scripts, UnitedHealth Group’s OptumRx, and CVS Health’s Caremark, the three largest PBMs in the U.S., control about 80% of prescriptions in the country.

Key findings from the committee’s investigation reveal that PBMs have developed lists of preferred medications that tend to favor higher-priced brand-name drugs over less expensive alternatives. For example, emails from staff at Cigna highlighted efforts to discourage the use of more affordable options compared to Humira, a treatment for arthritis and other autoimmune conditions costing around $90,000 annually, despite the availability of a similar biosimilar at half that price.

The committee also noted that Express Scripts informed patients they would incur higher costs when filling prescriptions at local pharmacies compared to obtaining a three-month supply from its associated mail-order pharmacy, thereby restricting their pharmacy choices.

Earlier this month, the U.S. Federal Trade Commission released a similar report, indicating that the increasing consolidation of the industry allows the six largest PBMs to manage nearly 95% of all prescriptions filled in the U.S.

The findings raised significant concerns, with the FTC stating that “leading PBMs now wield considerable power over Americans’ access to and affordability of prescription drugs.” This situation promotes a system where vertically integrated PBMs could potentially favor their own affiliated companies, leading to conflicts of interest that disadvantage independent pharmacies and drive up drug prices.

FTC Chair Lina M. Khan pointed out that the evidence suggests these intermediaries are “overcharging patients for cancer drugs,” resulting in over $1 billion in extra revenue.

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