PBMs Under Fire: Uncovering the Hidden Costs of Prescription Medications

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

The findings, covered by the Wall Street Journal, come after a 32-month investigation by the committee in advance of a hearing with executives from the largest PBMs in the country.

PBMs serve as intermediaries managing prescription drug plans for health insurers, negotiating drug prices with pharmaceutical companies and determining patient out-of-pocket costs. The biggest PBMs—Express Scripts, UnitedHealth Group’s OptumRx, and CVS Health’s Caremark—control about 80% of U.S. prescriptions.

The committee’s investigation revealed that PBMs tend to favor higher-priced brand-name drugs over more affordable alternatives. One example highlighted involved emails from Cigna discouraging the use of less expensive substitutes for Humira, a medication costing approximately $90,000 annually, even though a biosimilar was available for around half that price.

Additionally, the report indicated that Express Scripts informed patients they would incur higher costs when obtaining prescriptions from their local pharmacies as opposed to ordering a three-month supply through their mail-order service. This practice restricts patients’ pharmacy choices.

Earlier this month, the Federal Trade Commission (FTC) released a similar report, noting that the top six PBMs manage nearly 95% of all prescriptions filled in the U.S. It expressed concern over the significant power these leading PBMs have over American patients’ access to affordable medications. The FTC suggested that the vertical integration of PBMs fosters conflicts of interest, enabling them to favor their own businesses and inflate drug prices. According to FTC Chair Lina M. Khan, these findings indicate that PBMs are overcharging patients for cancer medications, generating excess revenue exceeding $1 billion.

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