PBMs: Bad for Your Health, Your Wallet, and Your Tax Bill
Pharmacy benefit managers, commonly known as PBMs, are third-party administrators contracted by health plans, large employers, unions and government entities to manage prescription drug benefits programs.
PBMs are the single biggest influence on the soaring price of prescriptions. Originally intended to process claims on behalf of clients, PBMs profit at every stage of the supply chain from drug maker to patient. They are often called “invisible middleman” because they are hidden between the patient’s insurance company, who the PBM works for, and the pharmacy, who the PBM reimburses for dispensing the prescription. Currently the three largest PBMs - CVS Caremark, Express Scripts and OptumRx (a division of United Healthcare) hold nearly 80% of the prescription benefits market in the U.S.
Most Americans know PBMs as their prescription drug benefits plan provider as part of their health insurance coverage. While the prescription benefits plans have different names, most can be tied back to one of the “Big Three” PBMs.
How Are Taxpayers Affected by PBMs?
Recent investigations in states like Ohio, Kentucky and Arkansas have uncovered serious questions about the level of profiteering PBMs that manage Medicaid may be engaged in. As with private health plans, PBMs provide a third-party prescription drug benefit plan to Medicaid and Medicare enrollees, and bill the government for their services. State government pays for services with money raised by local taxes and receives matching federal funding (also taxes) to cover costs. In Ohio, an independent investigation by the Columbus Dispatch has shown CVS Caremark has been charging the state as much as 9 times the cost of a prescription drug while reimbursing local pharmacies below cost, meaning state taxpayers are paying CVS several times more than the going price for several common medications — and keeping the profits for themselves.
How Do They Get Away with It?
The lack of regulatory oversight and demand for transparency in the PBM industry has allowed PBMs to overcharge for prescription drugs for decades. PBMs typically don’t provide clients with complete, itemized billing statements so it’s only when informed patients and health plan sponsors “put 2 and 2 together” that they begin to understand how they’re probably greatly overpaying for their prescription medications while the “savings” they thought they would see go directly into the pockets of the PBMs — and their shareholders.
What Can I Do About It?
Several things. Come in to Wilmont Pharmacy and talk to one of our team to understand how your drug plan influences the price you pay for medications. If you manage an employee benefit plan, ask your broker or PBM representative to provide a detailed explanation of your fee structure, or contact PUTT for information on switching to a transparent “pass through” PBM.