Consumer groups, independent pharmacies, and drugmakers rightly complained for years that pharmacy benefit managers (PBMs) have used their position as supply chain middlemen to benefit themselves at the expense of patients and payers.
At last, relief is in sight. Congress and the Department of Labor are now poised to align PBMs’ incentives with employers and patients, including making PBMs legally accountable as fiduciaries.
I’ve been studying PBMs for as long as the complaints have been piling up. My research with colleagues at the USC Schaeffer Center shows that PBMs negotiate, but patients and payers too often do not benefit from it. For example, between 2014 and 2018, PBMs’ share of insulin expenditures nearly tripled with no overall savings to payers. At the same time, higher rebates led to higher list prices — roughly $1.17 in higher list price for every additional dollar in rebates — which inflates out-of-pocket costs for patients whose cost-sharing is tied to list prices.
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