Fact Checked

Pharmacy Benefit Managers May Be Driving Up Costs

Pharmacy Benefit Managers May Be Driving Up CostsThe way pharmaceutical companies and health insurance companies interact is fairly well understood: the drug companies set high prices, the insurance companies negotiate them down to low prices, and they then provide their customers with an affordable copay. So what, then, are pharmacy benefit managers (PBMs), and what do they do for consumers?

The Idea

PBMs act as the middlemen between health insurance providers, pharmacies, and pharmaceutical companies. The reason these providers rely on them is because they can combine the efforts of several providers and increase the power of collective bargaining: it’s estimated that three PBMs represent 70 percent of the market.

Pharmacies buy their medication supplies for less than the retail price in order to make a profit, and PBMs determine how much the insurance companies and policy holders pay out for a given prescription. However, they also determine how much of that payment goes to the pharmacy and how much to themselves.

The Reality

PBMs use contracts to keep their negotiations completely confidential, and to keep their own role as far from the public eye as possible. Reportedly, clauses in a standard PBM contract forbid pharmacies from even speaking about them in a negative way.

And yet doing so may be justified. In some cases, PBMs are actually setting copay prices higher than retail prices, a practice which pharmacists refer to as “a clawback.” One standout example involved setting the retail price of a drug to $116 and the copay to $189. This gave the pharmacy a $45 profit, but $73 were retained by the PBM. In another instance, the PBM set a month’s supply of Lipitor to $21.60, and only half that amount went to the pharmacy.

Confidentiality may make it easier to strike a deal with drug companies and get bargains they might not have considered were the details to go public, but now that some of the details are becoming public, it’s becoming apparent that it’s also easier to price gouge consumers when they don’t know what’s going on behind the numbers they pay.

Fortunately, you do have one way to get a guaranteed bargain: the USA Rx pharmacy discount card. Our card offers up to 75 percent off of prescription drugs of all kinds, and you’re free to pay whichever price is lower between our discount and your insurance copay. We don’t demand any premium payments and we don’t need any personal information beyond your name and an email address, and you can learn more by sending us an email at [email protected] or calling our toll-free number at 888-277-3911.