PBMs Swimming Against Rising Tide of More Drug Pricing Transparency
March 7, 2017
By Alan G. Rosenbloom | Morning Consult
Amid the public uproar surrounding skyrocketing drug prices, pharmacy benefit managers — the pharmaceutical industry’s primary middlemen — are attracting new scrutiny from key members of Congress increasingly disturbed by benefit managers’ complex array of surreptitious pricing practices and protocols. But it was always just a matter of time until consumers’ growing outrage incentivized lawmakers to shine a spotlight on the systemic reasons behind pricing volatility, and the various players involved in making these determinations.
PBMs, heretofore little-known entities in the drug cost and supply chains, have for years been content to work behind the scenes establishing drug formularies, negotiating discounts and “rebates” with drugmakers, wholesalers and others in the distribution chain — ostensibly to reduce the cost of prescription medications to consumers and the Medicare program — and negotiating contracts with pharmacies or their representatives.
The problem with the PBM-negotiated contracts — and the size of the rebates — is that they are variable and secret. Without a clear picture of the transactions, consumers’ understanding of why prices of prescription drugs continue to spike is limited to what one encounters at the pharmacy counter. These numbers do not come close to telling the whole story.