Pharmacy Benefit Managers and Their Unfair Pricing Tactics in Need of Reform

Pharmacy Benefit Managers have been spreading misleading information, claiming that efforts to prevent their dishonest practices and enhance accountability equate to excessive government involvement in healthcare. Pharmacy Benefit Managers have fooled everyone for far too long. They have been allowed to deploy unfair pricing tactics that boost their own profit while harming patients across the country. 

Research shows spread pricing and rebates benefit Pharmacy Benefit Managers and have helped the three largest Pharmacy Benefit Managers monopolize the pharmaceutical market. This means important decisions regarding patients and their medicines are left in the hands of a few money grabbing insurance and Pharmacy Benefit Managers conglomerates. In fact, three insurance and Pharmacy Benefit Managers conglomerates control nearly 80 percent of the prescription drug market, up 48 percent from 2010.

Misaligned incentives in the Pharmacy Benefit Manager market undermine competitive forces intended to keep drug spending down. Pharmacy Benefit Managers get paid based on the price of medicines. This means they favor higher cost medicines over lower cost alternatives, increasing costs for patients, employers, the government and the broader health care system. Policies that would center Pharmacy Benefit Manager compensation around the services they provide instead of the price of medicines, and secure patient out-of-pocket costs at the pharmacy counter are based on the amount negotiated by Pharmacy Benefit Managers would help realign incentives and lower costs for patients.

Pharmacy Benefit Managers and their practices are damaging the U.S. economy and our international standing. As TAPP has said, this type of manipulation of the pharmaceutical industry sets America back in terms of international competition and allows foreign entities to surpass us in both research and patient care.

This is why TAPP is calling on Congress to generate reform and call the unfair Pharmacy Benefit Manager policies into question. These reforms include measures such as preventing Pharmacy Benefit Managers from receiving compensation based on drug prices, aligning patients' pharmacy-related expenses with the prices PBMs pay, and terminating PBM strategies that hinder patients from affording their medications. These reforms collectively aim to rectify a flawed system, foster healthy competition, and ultimately reduce healthcare costs for patients.

Congress is holding a hearing to discuss the dangers of Pharmacy Benefit Managers tomorrow, learn more here.