A recent article (“The Corporate Scam that Even Trump Opposes: PBMs”) attacks the one industry that is both reducing prescription drug costs and improving quality: pharmacy benefit managers (PBMs).
The White House fiscal year 2019 budget included many cost-saving items PBMs have long supported – and also noted that requiring Medicare Part D plans to use rebate savings to reduce Point-of Sale costs instead of premiums would raise taxpayer costs by $42 billion.
However, that was not mentioned in the article. Below are some additional important points to set the record straight.
- There is no evidence that the drug marketplace “suffers” from high concentration among PBMs. The Federal Trade Commission (FTC) has thoroughly scrutinized this and concluded there is significant competition among PBMs, which ultimately benefits consumers.
- The FTC has examined the industry numerous times over the past 15 years and repeatedly found that the pharmacy benefit management industry is a competitive and diverse marketplace that is driving cost savings and quality improvements for health care consumers and purchasers.
- There are dozens of PBMs in the U.S. that offer a wide range of services and options to payers. The vigorous competition in the industry gives payers the ability to safeguard their interests through negotiated contracts and choice of plan designs.
- The FTC, as requested by the ERISA Industry Council, recently examined competition among PBMs and the types of compensation and disclosure arrangements negotiated by PBMs and plan sponsors. The FTC’s investigation revealed that competition for accounts is intense, has driven down prices, and has resulted in declining PBM profit margins—particularly in the large customer segment.
- In 2012, the FTC issued a statement that shows there is significant competition in the current employer market. The FTC found that “there are many examples of aggressive competition when accounts are perceived to be up for grabs,” and that “the Request For Proposal process promotes aggressive competition for employer business and impedes coordinated interaction.”
- An overwhelming body of research shows that PBMs are part of the solution to lowering health care costs, including research from the FTC, the Congressional Budget Office and the GAO.
- Typically, PBMs reduce prescription drug costs by 30%. In addition, four recent PBM drug trend reports found that drug trend percentages for 2016 were in the low single digits and about one-third of PBM clients experienced year-over-year declines in drug spending.
- In 2013, the first highly effective cure for hepatitis C—a small-molecule drug—was priced at $84,000 for a cycle of treatment. By 2015, after that drug faced competition from additional market entrants, PBMs were able to negotiate a 46% rebate—saving billions.
- In the case of generic drugs, PBMs also leverage marketplace competition to drive significant unit cost savings for their clients. Based on a recent Visante analysis, PBMs save patients and plans an average of $10 off the average $33 price of a generic prescription that an uninsured patient would pay at the pharmacy counter.
- The same analysis shows that on brand prescriptions, PBMs save patients and plans an average $123 compared to the average $391 price faced by an uninsured patient. On specialty medications, PBMs save an average of $1,593 off the average $4,943 price faced by an uninsured consumer.
Pharmaceutical Care Management Association