Economist Report Confirms Value of PBMs

A recent survey of nearly 700 employers across the country conducted by NORC at the University of Chicago found that employers are overwhelmingly satisfied with PBMs’ transparency, flexibility, and savings. The survey results should make Congress question the necessity of so-called PBM reform legislation. 

Key findings from the NORC survey include:

• Employers Are Overwhelmingly Satisfied with Their PBMs: Employers expressed high satisfaction with PBMs across key performance areas.
  • Contract Clarity: 90 percent of respondents expressed satisfaction with their PBMs’ clarity and transparency of contract terms.
  • Cost-Effectiveness: 88 percent of respondents expressed satisfaction with their PBMs’ ability to provide the lowest costs for employees at the pharmacy counter.
  • Negotiation and Savings: 86 percent of respondents expressed satisfaction with their PBMs’ ability to negotiate discounts from drug manufacturers and generate savings for their organization.
• The survey found that 90 percent of employers who received rebates in the past 12 months used them to offset overall prescription drug benefit costs.

It’s important to highlight a recent economic analysis by Dennis W. Carlton, Ph.D., David McDaniel Keller Professor of Economics Emeritus at the University of Chicago Booth School of Business.

Dr. Carlton said on the report: “Our year-long, comprehensive research—reviewing data on billions of prescriptions, including what was provided to the FTC—shows that PBMs distribute the vast majority of rebates to plan sponsors and should not be characterized as being ‘responsible’ for high drug costs … Many of the broad-brush claims against the PBM industry—including those of the FTC—are not based on systematic analysis of the evidence. Our findings—rooted in systematic, economic analysis of proprietary PBM data as well as third-party information—raise concerns about regulatory and legislative policies that seek to address high drug prices without drawing from a comprehensive, evidence-based analysis.”

See the full analysis on PBMs HERE.

Key findings from Dr. Carlton’s report:

According to the data, the manufacturer rebates—passed through by PBMs or distributed by PBMs as discounts—along with fees, are not the driver of increased drug costs.

• There is no basis, according to the research, for the claim that the growth in list prices is higher for rebated drugs than for non-rebated drugs. Between 2018 and 2022, the average wholesale price (adjusted in real terms for inflation) on rebated branded drugs increased by 2% while it increased by 3% on non-rebated branded drugs during this time.

 According to the data, PBMs are not driving independent pharmacies out of business.

• Data from the National Council of Prescription Drug Programs show that there are more than 20,000 independent pharmacies, with the number of independent pharmacy locations increasing by 9.3% between 2011 and 2021. By contrast, the number of chain pharmacy locations decreased by more than 5% during this same period.

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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.