top of page

PBM Warnings & Ramifications

Updated: Apr 12, 2022

Our blogs have previously addressed how traditional Pharmacy Benefits Managers (PBMs) can increase the price of prescribed medications. PBMs are essentially companies that manage prescription drug benefits, “acting as the go-between for drug manufacturers and employers. However, PBMs do not always do so with the intention of securing the most cost-effective drugs, affecting access to medications and out-of-pocket costs,”(1) since traditional PBMs reimbursement is based on the cost of the medication.  The impact of higher costs is not insignificant: “about three in ten (29%) of all adults report not taking their medicines as prescribed at some point in the past year (2018) because of the cost.”(2) According to a poll by The Kaiser Family Foundation, 33% of all people aged 50-64, have trouble affording their medications. This demographic also take more medications than younger people but are not old enough to qualify for Medicare.(2) However, beyond the financial concerns PBMs produce, there are other, less obvious but nonetheless critical effects.  

Some Background and Financial Consequences of PBMs

How to Spot a ‘Self-Serving’ PBM (And What Can Be Done About It)

In a recent interview with Dae Lee, a pharmacist attorney at the healthcare and life sciences law firm Frier Levitt, he lists some of the warning signs that can indicate a PBM is not working in your best interests.(6) These may include multiple audits per month of small or independent pharmacies. Besides the financial burden that these audits put on the pharmacy, if a major PBM terminates or suspends the pharmacy from its network, the pharmacy is likely to go out of business.  He cites their motive as with only three PBMs (CVS Caremark, Express Scripts, and OptumRx) having control of nearly 80% of the market, and they are already vertically integrated (i.e., they are their own plan sponsors and pharmacies), by trying to drive independent pharmacies out of the picture they receive more prescriptions and therefore more money. (6-8) Another warning is the misaligned incentives we have mentioned previously. For example, if the PBM is receiving their payment as a percentage of the cost of the medication, as opposed to a flat, modest fee per transaction, that is a sure indicator.  As Lee states, “Fortunately, there are a number of smaller PBMs who are trying to put an emphasis on transparency.” A transparent PBM would have their incentives aligned to save money for both the employer and employee, rather than with the pharmaceutical companies – or the larger pharmacies.  By restricting the use of coupons – a tool typically used to steer patients to a higher costing drug for the employer (while being less expensive for them) – companies can also decrease expenses. While the generic may cost a modest amount to an employee and to the employer, the coupon or rebate for the name brand version may make the drug free in some cases to the insured but be multiple times more expensive for the employer. Therefore, price transparency, in general, is one of the strongest strategies to combat traditional PBMs and rising medication costs.

PBM’s Toll: “Horror Stories”

The website of The Community Oncology Alliance (COA), a non-profit organization dedicated to advocating for community oncology practices and the patients they serve,3 has a five-part series on PBMs that is illuminating.(4) Therein, they recount cases of people receiving delayed medications with often “The most common and devastating issue that cancer patients face with PBMs is the fact that they must wait, for weeks or even months, to obtain medication that they could have received within 24 hours, had they been permitted to get it at the point of care from their oncologist. Beyond the stress and aggravation incurred, delays in receiving medication often translate into delayed treatment and worsening of the patient’s condition, and in the most tragic of cases, possibly contributing to the patient’s death.”(5) Other causes can range from a small detail missing in the paperwork, combined with a non-communicative PBM, to errors in dosing instructions.

Broader Strategies 

On a more comprehensive and possibly optimistic note, the are many bills before state and federal legislatures, designed to investigate and eventually address some of the issues raised here. One such piece introduced proposes, “To require the Government Accountability Office (GAO) to study the role pharmaceutical benefit managers play in the pharmaceutical supply chain and provide Congress with appropriate policy recommendations, and for other purposes.”(9) As part of this new interest, “Over 200 bills in 48 states were introduced related to pharmacy benefit manager (PBM) reform, and 46 laws passed in 27 states. PBM reform has been at the forefront of debates in legislatures across the nation for several years and all 50 states now have at least one law addressing PBM business practices.”(10) Until the situation is perceived to be under control, this trend is expected to continue.

Contact Commonwealth Insurance Partners today for other ways to ensure that you are working with a transparent and not a traditional PBM, and to be certain that your healthcare benefits spending is correlated to the best care and medications.













bottom of page