From my America Out Loud Pulse podcast with Dr. Marion Mass – https://www.americaoutloud.com/the-truth-about-pharmacy-benefit-managers/
Nobody wants fraud—particularly not in medical care. Accordingly, in 1972, Congress passed the Federal Anti-kickback Statute that outlawed kickbacks for referrals for medical care and other contracts in the medical field. This was to be sure that referrals of patients to other medical care professionals were in the best interest of the patients. In an interesting turn of the law, 25 years ago the government made exceptions to the Anti-kickback statute, allowing middlemen to negotiate rebates and discounts on medical products. The problem: the middlemen typically are paid by a percentage of the rebate or discount off the list price. The higher the price they negotiate, the higher their piece of the action.
In the world of prescription drugs, pharmacy benefits managers (PBMs) are the middlemen who negotiate discounts and rebates for private and government insurers. PBMs promote the false perception that they save patients money. The rebates are supposed to go back to the government or to insurers to lower premiums or otherwise benefit patients. Instead of saving money, we now have a system where after insurance a drug costs $150 for consumers whereas with GoodRx the same drug is $6.
Today, three of the biggest companies, control about 89 percent of the PBM market— CVS (which owns Caremark), United Health (which owns OptumRx) and Cigna (which owns Express Scripts). Their 2021 revenues were $292.1 billion, $287.6 billion and $171.1 billion, respectively. Given these figures, PBMs have been under increasing scrutiny in recent months from Congress and the Federal Trade Commission (FTC) for their contribution to high consumer drug prices. They want information on contract terms, rebates, fees, pricing policies, steering methods, conflicts of interest, substitution of prescriptions, and consolidation of PBMs with pharmacies and insurance companies.
In today’s show, Dr. Marion Mass explains how the system of pharmacy benefit managers has morphed into a big money-making scheme and patients are left holding the bag (of higher costs).
