PBMs Under Fire: Are They Driving Up Your Medication Costs?

A recent report from the House Committee on Oversight and Accountability reveals that pharmacy-benefit managers (PBMs) are directing patients toward more costly medications and restricting their pharmacy options.

This report, reviewed by the Wall Street Journal, follows an extensive 32-month investigation conducted by the committee in anticipation of a hearing on PBMs featuring top executives from the country’s largest managers.

PBMs function as third-party administrators of prescription drug plans for health insurance providers, negotiating drug prices with pharmaceutical companies and establishing out-of-pocket costs for patients. The three largest PBMs in the U.S.—Express Scripts, OptumRx from UnitedHealth Group, and Caremark from CVS Health—handle roughly 80% of the nation’s prescriptions.

The committee’s findings indicate that these managers have developed lists of favored medications that prioritize higher-priced brand-name drugs over more affordable options. For instance, the report references internal communications from Cigna that discouraged the prescription of less expensive alternatives to Humira, a medication for arthritis and other autoimmune disorders that was priced at $90,000 annually, despite the existence of a biosimilar at half that cost.

Additionally, the committee discovered that Express Scripts informed patients they would incur higher costs at their local pharmacies compared to obtaining a three-month supply from their affiliated mail-order pharmacy, thereby restricting patients’ choices regarding where to fill prescriptions.

Earlier this month, the U.S. Federal Trade Commission (FTC) released a similar report, stating that increased vertical integration and market concentration have allowed the six largest PBMs to manage nearly 95% of all prescriptions filled nationwide.

The implications of these findings are concerning, as the FTC noted that the major PBMs wield considerable influence over Americans’ access to and affordability of prescription medications. The structure enables vertically integrated PBMs to favor their own affiliated entities, leading to potential conflicts of interest that could harm independent pharmacies and drive up drug prices.

FTC Chair Lina M. Khan highlighted that these intermediaries are “overcharging patients for cancer drugs,” resulting in additional revenues exceeding $1 billion.

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