Employers Demand Greater Transparency from PBMs Amid Rising Costs

By Consumers for Quality Care, on November 20, 2024

Under increasing legal pressure to ensure they aren’t wasting money on overpriced health insurance for their workers, employers are challenging pharmacy benefit managers’ (PBMs) outsized influence in the prescription-drug market, according to Axios. 

Though the Biden administration and Congress have placed extra scrutiny on PBMs over the last few years, it would be an even greater threat to PBMs if private companies were to bypass them entirely, for example, by negotiating directly with drug providers to get better deals for their employees. 

A survey conducted by the National Alliance of Healthcare Purchasers found that nearly half of all companies polled are looking to change their relationship with their current PBM in one to three years. Roughly half of the companies said they were “not confident in [the] integrity and lack of conflicts in PBM administration.” PBMs claim they create savings by negotiating costs between drug manufacturers and insurance companies, but this new survey suggests that employers aren’t seeing the savings. In fact, of the companies that were surveyed, 90 percent expressed support for PBM reforms to improve transparency, ban spread pricing and require that cost savings be passed to the consumer.  

Mark Cuban, who is looking to disrupt the PBM industry, recently raised this issue, arguing that PBMs are not working in the best interests of the large employers who hire them to manage their company’s prescription-drug benefits. Instead, he says, PBMs are motivated to pad their bottom lines with the savings they negotiate.  

PBMs, if left unchecked, will continue using anticompetitive business practices that drive up costs, limit consumers’ access to drugs, and force independent pharmacies to shut their doors. CQC urges lawmakers and regulators to continue scrutinizing PBMs and ensure access to high-quality affordable care for all consumers.