As members of Congress get back to business after the holidays, they seem to be poised to pass legislation that would address some of the abuses of pharmacy benefit managers (PBMs), the middlemen who extract so much money from the pharmaceutical supply chain.
Agree. My hubby has to pay upfront $648 for his first refill for his band named medicine, Farigxa.
This is out outrageous! I am tired of using my savings to fund the profit of the three big insurance companies. We need healthcare for all and medicines for all. Take the profit out of healtcare.
First, thank you for the work/research you do and the eyes you have opened to these crooked and scamming PBMs. I worked in pharma R&D for 36 yrs and put up with people's negative opinions of pharma - Why are my drugs so expensive?? PBMs are like the dirty rotten underbelly of healthcare that no one knows about yet their profits are off-the-charts outsized. My big question is, What the hell do they actually do? What service do they provide? At least Pharma spends billions to develop new drugs and takes on enormous risk because of the high failure rate. What in God's name do the PBMs do??
Not a fan of PBMs, but I know a lot about them. They began many decades ago as claims processors and adjudicators. They did (and do) this on behalf of health plans and employers. Given the complexities involved in our multi-payer, fragmented system, it made (makes) sense for many firms to not do claims processing in-house. A natural extension of their original claims work was (custom) designing formularies on behalf of health plans and employers. PBMs quickly learned ways in which they could make money from their formulary (pricing and reimbursement) work: Rebates and spread pricing. And here is where it got (gets) ugly. PBMs manipulate an opaque system riddled with arbitrage and other profit opportunities to enrich themselves. If this was done with the patient in mind, it wouldn't be a big deal. But it's not, in my view. I've analyzed this extensively and published in both peer-reviewed journals and periodicals. PBMs have created a vast web of financial relations with stakeholders, all of which perversely incentive behavior that does not benefit the patient, harms the pharmacy and raises overall pharmaceutical spending.
Thanks for this comment, Joshua, and for the original post, Wendall. Can either of you direct us to a good synopsis or PowerPoint slide set that explains exactly what PBM's do? It really is baffling!
I've published peer-reviewed papers on PBMs and what they do. But these are a bit dated as they're from the 2000s and 2010s. Currently, I give webinars on the drug supply chain. Because of proprietary restrictions imposed by a third party for whom I work I can't post them, though I can point you to my many recent Forbes articles on the topic of PBMs, rebates and spread pricing, as well as the legislation intended to curb these practices.
Perhaps the best primer I know on PBMs but also the entire drug supply chain was just published by the academics Hernandez and Hung. Their focus isn't on everything PBMs do, but from a neutral perspective they write about the financial relationships PBMs enter within the drug supply chain. https://www.jmcp.org/doi/epdf/10.18553/jmcp.2024.30.1.99
Adam Fein of Drug Channels Institute writes a lot about PBMs, too, also looking at their role as financial mediators, formulary designers, parts of vertically integrated entities. You can find posts of his on the Drug Channels website.
Thank you - sounds quite complex and as you describe, opaque which makes it much more difficult to find a fix. Big corps don’t like regulations, but I suspect much of it came from dishonest and fraudulent behaviors (even criminal...eg Purdue pharma and others). Many people will not be happy when we end up with socialized medicine, and we can look back and understand why - corporate greed (and I’m an R!)
If PBMs go away or are radically restructured, what will happen? Are they just rentiers, or do they have a function that will still have to be done by some entity? Another question--what is an alternative? I am a TRICARE beneficiary--retired military--and i know TRICARE negotiates with drug manufacturers for lower costs--as does the VA and the federal prison system. Would that model be a useful alternative to a PBM? I note that all my drugs come via mail order from Express Scrips, which has been the DoD contractor for decades for this.
What it is is a rigged cronyism of those who “know people,” in a corrupt revolving doors of government and private sectors, and the paying public is suckered.
Agree. My hubby has to pay upfront $648 for his first refill for his band named medicine, Farigxa.
This is out outrageous! I am tired of using my savings to fund the profit of the three big insurance companies. We need healthcare for all and medicines for all. Take the profit out of healtcare.
First, thank you for the work/research you do and the eyes you have opened to these crooked and scamming PBMs. I worked in pharma R&D for 36 yrs and put up with people's negative opinions of pharma - Why are my drugs so expensive?? PBMs are like the dirty rotten underbelly of healthcare that no one knows about yet their profits are off-the-charts outsized. My big question is, What the hell do they actually do? What service do they provide? At least Pharma spends billions to develop new drugs and takes on enormous risk because of the high failure rate. What in God's name do the PBMs do??
Not a fan of PBMs, but I know a lot about them. They began many decades ago as claims processors and adjudicators. They did (and do) this on behalf of health plans and employers. Given the complexities involved in our multi-payer, fragmented system, it made (makes) sense for many firms to not do claims processing in-house. A natural extension of their original claims work was (custom) designing formularies on behalf of health plans and employers. PBMs quickly learned ways in which they could make money from their formulary (pricing and reimbursement) work: Rebates and spread pricing. And here is where it got (gets) ugly. PBMs manipulate an opaque system riddled with arbitrage and other profit opportunities to enrich themselves. If this was done with the patient in mind, it wouldn't be a big deal. But it's not, in my view. I've analyzed this extensively and published in both peer-reviewed journals and periodicals. PBMs have created a vast web of financial relations with stakeholders, all of which perversely incentive behavior that does not benefit the patient, harms the pharmacy and raises overall pharmaceutical spending.
Thanks for this comment, Joshua, and for the original post, Wendall. Can either of you direct us to a good synopsis or PowerPoint slide set that explains exactly what PBM's do? It really is baffling!
I've published peer-reviewed papers on PBMs and what they do. But these are a bit dated as they're from the 2000s and 2010s. Currently, I give webinars on the drug supply chain. Because of proprietary restrictions imposed by a third party for whom I work I can't post them, though I can point you to my many recent Forbes articles on the topic of PBMs, rebates and spread pricing, as well as the legislation intended to curb these practices.
Perhaps the best primer I know on PBMs but also the entire drug supply chain was just published by the academics Hernandez and Hung. Their focus isn't on everything PBMs do, but from a neutral perspective they write about the financial relationships PBMs enter within the drug supply chain. https://www.jmcp.org/doi/epdf/10.18553/jmcp.2024.30.1.99
Adam Fein of Drug Channels Institute writes a lot about PBMs, too, also looking at their role as financial mediators, formulary designers, parts of vertically integrated entities. You can find posts of his on the Drug Channels website.
Thank you so much! This is gold!
Thank you - sounds quite complex and as you describe, opaque which makes it much more difficult to find a fix. Big corps don’t like regulations, but I suspect much of it came from dishonest and fraudulent behaviors (even criminal...eg Purdue pharma and others). Many people will not be happy when we end up with socialized medicine, and we can look back and understand why - corporate greed (and I’m an R!)
Pharma isn't in the risk taking business. They don’t develop drugs. They buy the already developed drugs from the university/research sector.
You couldn't be more wrong. I worked my entire career (36 yrs) in big and small pharma...from peon to Sr VP level. You are 1000% wrong.
It's a national disgrace...Profit profit profit, all along the way, of for-profit healthcare, doesn't keep patient medical debt away.
A new systematic distribution model to bypass all this is the solution.
If PBMs go away or are radically restructured, what will happen? Are they just rentiers, or do they have a function that will still have to be done by some entity? Another question--what is an alternative? I am a TRICARE beneficiary--retired military--and i know TRICARE negotiates with drug manufacturers for lower costs--as does the VA and the federal prison system. Would that model be a useful alternative to a PBM? I note that all my drugs come via mail order from Express Scrips, which has been the DoD contractor for decades for this.
What it is is a rigged cronyism of those who “know people,” in a corrupt revolving doors of government and private sectors, and the paying public is suckered.
80 year old generics cost $100.00 per month.