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Do PBMs Drive Drug Costs Up or Down? Can They Do Better?

It is frustrating. The list price of Mounjaro (tirzepatide) is more than a thousand dollars per month. Pharmacy Benefit Managers (PBMs) negotiate costs for this drug that brings the average cost down to an estimated $215,  but many folks get stuck paying the full list price, forgoing treatment, or paying a copay that might exceed the net cost to a PBM. That’s more of a you-pay than a co-pay.

These inflated list prices and opaque games with big rebates that often don’t flow through to the benefit of consumers leads many people to believe PBMs may be driving drug costs up. Even though their stated purpose is just the opposite.

Can we expect they will do better?

Reforms Likely, but Benefits Uncertain

Reforms are rumbling through the U.S. Congress and lawmakers increasingly expect something to pass. But the real question is whether or not it will be any help to patients.

In JAMA Health Forum, Joseph Mattingly, David Hyman, and Ge Bai offer a thorough assessment of PBMs and the prospects for their reform. They serve diverse purposes – designing formularies, managing drug utilization, negotiating prices, setting up pharmacy networks, and providing mail order pharmacy services. But the industry has become highly concentrated, uncompetitive, and lacking in transparency.

Mattingly et al are cautious in their assessment of the prospects for reform. If they serve to promote competition, reforms may help. But the risk is very real that pharmacies and pharmaceutical manufacturers will influence the “reforms” to serve their own business interests without helping consumers.

A Step Forward?

Writing in NEJM last week, Christopher Cai and Benjamin Rome were more blunt:

“Although it’s encouraging to see bipartisan support for lowering prescription drug costs, we believe Americans shouldn’t expect the proposed federal PBM regulations to substantially reduce spending by patients or the government.”

They say that the pending reforms might keep PBMs from employing some of the tactics that have driven drug costs up. However, it’s entirely possible that PBMs will adapt and limit the flow of benefits to consumers.

One step forward. Two steps back.

Click here for the Mattingly overview and here for the perspective of Cai and Rome. For further perspective, click here.

Looking Up at the Vatican Museums Spiral Staircase, photograph by Colin, licensed under CC BY-SA 3.0

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November 6, 2023

One Response to “Do PBMs Drive Drug Costs Up or Down? Can They Do Better?”

  1. November 06, 2023 at 7:58 am, Allen Browne said:


    A lot of questions and no answers.