A team of professors from Johns Hopkins University, Georgetown Law School, and Utah University College of Pharmacy published in the JAMA Health Forum a paper, “Pharmacy Benefit Managers: History, Business Practices, Economics, and Policy,” focused on pharmacy benefit companies and the critical role they play in the prescription drug supply chain, including negotiating price concessions from drug companies and pharmacies. The article also examines recent anti-PBM policies being considered in Congress, which the authors conclude would do nothing to improve competition in the prescription drug supply chain and instead serve the special interest pushing the policies – Big Pharma.

The professors conclude that policies targeting pharmacy benefit companies will only weaken their negotiating power with drug companies, which will reduce the savings passed down to health plan sponsors, such as small businesses and labor unions. They explain:

“[E]ven if PBMs cannot fully adapt their business models in response to regulatory change, it is far from clear that plan sponsors and patients, as opposed to other players in the pharmaceutical supply chain, would actually benefit. Plan sponsors and patients may only benefit if pharmaceutical manufacturers, wholesalers, and pharmacies are willing to offer lower prices in the absence of PBMs or with PBMs that are significantly weakened.”

They explicitly call out proposals that ban spread pricing and mandate rebate pass-through as having unintended consequences:

“Policy reforms that ban spread pricing or require 100% rebate pass-throughs in the contracts between PBMs and plan sponsors may actually go too far in weakening the incentives of PBMs to negotiate with pharmacies and manufacturers.”  

Big Pharma-backed policies aim to ban the market-based incentives that help pharmacy benefit companies successfully secure greater savings for plan sponsors through rebates. The cost of these policies to the Medicare Part D program and the commercial health care market has been estimated at billions of dollars annually.

Analyses from health policy researcher Alex Brill and University of Chicago Professor of Economics Casey Mulligan, Ph.D., find that the so-called “delinking” policy would hand a financial windfall totaling up to $32 billion annually to drug companies and be a collective increase in health insurance premiums of as much as $39.6 billion across Medicare Part D and commercial markets.

The proposals being considered by Congress do nothing to actually address high prescription drug prices and instead narrowly target pharmacy benefit companies, which will raise costs for patients and only benefit Big Pharma.

Read the full JAMA paper HERE.

See Alex Brill’s full analysis HERE and Dr. Mulligan’s HERE. 

See the catastrophic effects of “delinking” policies HERE.

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Read why other policy experts are also sounding the alarm over “delinking” legislation HERE.

Learn more about what other economic and health care experts are saying to urge Congress to reject banning performance-based payments for pharmacy benefit companies. See more HERE

See PCMA’s guide to understanding the role and value of pharmacy benefit companies HERE.

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PCMA is the national association representing America’s pharmacy benefit companies. Pharmacy benefit companies are working every day to secure savings, enable better health outcomes, and support access to quality prescription drug coverage for more than 275 million patients. Learn more at www.pcmanet.org