PBMs Support Non-Affiliated Pharmacies, Provide Higher Reimbursement

(Washington, D.C.) — The Pharmaceutical Care Management Association (PCMA) issued the following statement on the release of an updated report from Dennis W. Carlton, Ph.D., Professor of Economics Emeritus at the University of Chicago Booth School of Business, one of the leading industrial organization economists in the country, and former chief economist at the U.S. Department of Justice (DOJ) Antitrust Division, along with a team of economists at Compass Lexecon on the role of pharmacy benefit managers (PBMs).

Read the full report HERE.

The report examines several important PBM issues including finding that reimbursement to PBM-affiliated pharmacies, on average, is below the National Drug Acquisition Cost (NADAC), while reimbursements to non-affiliated pharmacies are higher than NADAC on average — meaning PBMs are on average reimbursing pharmacies that are not affiliated with a PBM at a higher rate than affiliated pharmacies. Importantly, the report also finds that, contrary to accusations, PBMs are not driving non-PBM-affiliated pharmacies out of business.

Dr. Carlton’s report states:

“Claims that PBMs are harming plan sponsors and beneficiaries of drug benefit plans — by earning large and growing profits, retaining large percentages of the rebates received from manufacturers, retaining large percentages of the amounts plan sponsors pay to pharmacies, causing drug prices to rise more than they otherwise would, causing independent pharmacies to go out of business, and raising reimbursements to affiliated pharmacies in order to enrich themselves and raise the cost of drugs — are not supported by the data. Our results are consistent with other studies that find that PBMs play an important role in containing prescription drug costs and thus overall health care costs.”

Key highlights from Dr. Carlton’s updated report include:

• Plan sponsors and patients would not realize substantial savings if they used only non-affiliated pharmacies. At the prices shown in the data, total drug expenditures (by plan sponsors and patients combined) would be about the same whether the basket of all drugs was purchased at non-affiliated pharmacies or at PBM-affiliated pharmacies. This counters the idea that overall drug expenditures could be significantly reduced if drugs were no longer purchased at PBM-affiliated pharmacies.
• Reimbursements on all prescription drugs are, on average, lower than NADAC baseline at PBM-affiliated pharmacies. When all drugs are considered, the average reimbursement markup, when compared to NADAC as a baseline, at PBM-affiliated pharmacies is negative: the reimbursement rate is 2.1% below NADAC acquisition cost at PBM-affiliated pharmacies compared to 3.8% above NADAC at non-affiliated pharmacies.
• PBMs aren’t driving non-affiliated pharmacies out of business. Spending on all drugs, all specialty drugs, and specialty generic drugs at non-affiliated pharmacies is increasing over time. PBMs rely on non-affiliated pharmacies as important partners in filling prescriptions; these account for more than half of all drug payments.
• Analyses seeking to understand drug expenditures need to include the full basket of drugs in order to avoid an incomplete or biased assessment of the prescription drug market. Plan sponsors typically contract with PBMs to cover an entire basket of drugs. Studies that choose only a narrow subset of drugs, rather than examining the entire basket, are limited and not generalizable.

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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 289 million patients.