Few healthcare entities are worse than the pharmacy benefits managers (PBMs).
These so-called industry intermediaries have attracted significant negative attention to accusations that they have raised prescription drug prices. They have been attacked by pharmaceutical companies, Congress, and even the White House.
In January, the Federal Trade Commission accused the three largest PBMs (CVS Caremark, Optum and Express scripts) of increasing drug prices over $7.3 billion over five years. The market share of these three PBMs is approximately 80%.
PBMs face many headwinds in navigating not only controversial relationships with pharmaceutical companies, but also intra-industrial critiques from early, small-sized PBMs.
Over the past year, PBM has been bruises in the court of public opinion.
Last spring, Congress aimed to curb “price spread.” This is the practice of large PBMs charging more employers for what PBMS pays for drug dispensaries.
At the end of the year, Senators Elizabeth Warren (D-MA) and Josh Hawley (R-MO) introduced a bill to ban PBMS from owning pharmacies.
Even President Donald Trump's criticism of PBMS for contributing high prices during his first term, resurfaced these concerns at a press conference before his second appointment.
Yet despite relentless pressure, no substantial action has been taken against the PBM.
Congress dropped PBM reforms from the government fundraising bill in December and left PBMS unharmed for the New Year.
Nemesis negotiations
The ongoing feud between drug makers and PBMs is primarily focused on drug pricing. Both sides point to their fingers and the other claims they are responsible for increasing the price.
Matthew Fiedler, an economist at the Brookings facility, points out that PBM's job is negotiating drug prices for insurance companies and employers in ways that benefit them.
In particular, all three biggest PBMs are owned by insurance giants. UnitedHealthGroup owns Optum RX, Cigna owns Express Scripts, and CVS Health owns Caremark.
Fiedler emphasizes that drugmakers also play a role given that they will enact the price of the list and negotiate with PBMs on price.
Joshua Fredell, Vice President of PBM and special product innovation at CVS Health, claims that there is always a “push-pull tension” between PBM and drug makers, but the two industries are intimate This is natural when working together.
Despite this claim, the relationship between PBMS and Pharma is best expressed in the public condemnation game.
PBM is launching a multi-million dollar advertising campaign that accuses PBM of raising drug prices from organizations aligned PHRMA and other industries.
There is one thing both parties agree on all conflicts surrounding PBM. It is unlikely that the relationship between large PBMs and large pharmaceuticals will improve anytime soon.
Lack of transparency
PBM argues that their role is to provide, rather than setting a fair drug price, but not everyone thinks it will achieve that.
Most independent pharmacies do not believe that large PBMs will provide these services with the best interest in mind.
Ronna Hauser, SVP of Policy and Pharmacists Association (NCPA) for Policy and Pharmacy, says PBMS' current pricing model makes it difficult for pharmacists to do their job and retain profits.
Hauser claimed that 90% of the average member of the NCPA prescribes a common version of the drug because the brand name is too high for consumers. However, these common drugs account for only 7% of the pharmacist's profits.
She reflects concerns that PBMs are not transparent enough to pricing decisions, which could have a negative impact on prescribing decisions as well.
“In many cases, pharmacists need to change the drugs they provide to their clients because that's not covered by their plans,” she says. “Pharmacists have increasingly prescribed drugs that could lead to loss of money.”
Feud within PBM
PBM is not only facing external critics, but also faces internal surprises.
The relationship between large PBMs and small and medium-sized enterprise PBMs is particularly difficult. That much the latter group has been rebranded as “transparent PBMs.” They argue for this distinction because they pay the price forward.
Transparent PBMs want the public to know that they don't like large-scale PBMs. If anything, they are passionate about potential reforms and what it means for their business.
“We generally support the type of action Congress is thinking of for corrective action, which was largely cheating by large PBMs,” says Transparent, a coalition of Transparent PBMs. explains Joseph Shields, managing director of Sex RX.
Michael Passanante, SVP of Marketing and Communications at Capital RX, could add a backlash to large-scale PBMs and increase the opportunities for transparent PBMs in the future.
But while some may think that PBM is abusive, it is safe for now.
Fiedler said the current law aimed at amending PBMs is far from passing and likely won't solve insurance companies, which are probably a bigger factor in high drug prices.
He says major reforms are needed to change the way PBMS works. In the current bipartisan environment, it is unlikely to happen within the next two years.
“PBM is an extension of insurance companies and we work for them,” he explains. “If things change, you need to deal with every player in the system.”
The issue of mm+m from February 1st, 2025 – Medical Marketing and Media
