The New York Times: PBMs “Are Driving Up Drug Costs for Millions”
By Consumers for Quality Care, on July 17, 2024
An investigative report from The New York Times found that pharmacy benefit managers (PBMs) operate under a veil of obscurity, allowing them to exert extraordinary power over the prices of prescription drugs, claiming to save consumers money while in reality only padding their bottom lines and raising the cost of health care for everyone else.
PBMs have been around since the 1950s, and until recently, they were often credited with saving consumers money on their prescriptions. But that changed in 2018, when corporate health insurers started acquiring, merging with, and building PBMs of their own, all in a gambit to grow their revenue. Now, the three largest PBMs are owned by health care behemoths – CVS Health, Cigna, and UnitedHealth Group. Together, they control 80 percent of the prescription drug market, an increase of 30 percent from just 12 years ago.
Moreover, the industry operates without any meaningful transparency. For this reason, it’s unclear whether PBMs create any savings from negotiated deals with pharmaceutical companies. Even if savings are created, it remains unclear whether those savings are actually passed on to consumers. These points are echoed by consumer advocates and critics of the PBM industry. They argue that PBMs today serve as mere middlemen, setting prices between prescription drug manufacturers, health plans, and pharmacies. Their position in the marketplace gives them power over what consumers come to pay for their medication, but according to critics, they use this power only to increase their own profits.
According to the Times, PBMs charge artificially high markups for drugs that should be much cheaper. They also push consumers to purchase more expensive medication, even when cheaper generic versions are available. According to Antonio Ciaccia, a consultant investigating PBMs, the industry saves money off “bogus inflated prices that should not exist in the first place. They are the arsonist and firefighter of high drug prices.”
Additionally, PBMs engage in anti-competitive practices that are driving independent pharmacies out of business, according to the New York Times. They also set up bureaucratic hurdles for consumers, making it harder for them to access their medications. Even for those who don’t take any medications, PBMs influence the health care system in such a way that it drives up health care costs for everyone.
According to Ohio Attorney General Dave Yost, who has sued two of the largest PBMs, the industry is self-serving at the detriment of consumers. “They’re seeking to extract from the system, without creating any corresponding value for the system,” said Attorney General Yost. “The patients are the ones that are suffering.”
CQC urges lawmakers and regulators to scrutinize PBM practices that are driving up the cost of prescription medications for consumers.
