Golden Gate CVS

Who Benefits from Pharmacy Benefit Managers?

A trip into the world of pharmacy benefit managers (PBMs) is enough to make our heads spin. It leads us to wonder: exactly who benefits from pharmacy benefit managers? The answer is not clear, but it seems obvious that patients in need of affordable medicine do not.

In Search of a Fair Deal

The biggest PBM is CVS Caremark, which controls an outsized 33 percent of the U.S. market. They have a glowing description of the benefits they provide. They claim to lower costs, increase access to care, and deliver better outcomes.

Recent experience tells us this is not exactly true. Take the example of a person looking for a prescription to be filled for a generic cream to treat a precancerous skin lesion. Paying for PBM services from Caremark, this person expects a fair deal in return for the cost of the service. But this is clearly not the case.

In the CVS pharmacy, he learns from the clerk that the out-of-pocket cost of a tube of this generic cream will be $164. In response to his dismay (the last Rx for this required only a $10 copay), the pharmacist and clerk probe their computer and then offer a cost of $78. Thinking this must be a mistake, the patient goes to the PBM website and patient assistance center where he learns that he is supposed to pay $99 under the drug plan he already pays for.

In the end, he ditched the PBM and found a price of $27.85 through GoodRx. (Note: this is not an endorsement of GoodRx. It was simply the tool that provided a solution in this case.)

So Who Benefits?

In this case, does the PBM deliver value for money to the consumer who pays for a drug plan? Not a bit. Caremark pockets the monthly premium and renders no service whatsoever. If a consumer is foolish enough to believe Caremark’s promise of “lower costs,” they might pay an inflated $164 price tag at the pharmacy and give CVS even bigger profits.

So no, consumers don’t benefit.

Does the U.S. economy benefit from the power of PBMs to lower costs and improve access to care? Apparently not, because Americans pay the highest drug costs in the world and we are the only place where PBMs can operate as they do, making promises they clearly do not fulfill. In fact, PBMs seem to benefit as drug prices spiral upward.

Ethical Issues

In a recent analysis, Jacob Drettwan and Andrea Kjos found ethical problems with market consolidation, gag clauses, and fluctuations in pharmacy reimbursements that arise from PBM business practices. We can understand why the Federal Trade Commission sees problems with the business practices of PBMs.

We see it, too.

Click here, here, and here for further perspective.

Golden Gate CVS, photograph by DuenasG, licensed under CC BY-SA 3.0

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November 15, 2023

One Response to “Who Benefits from Pharmacy Benefit Managers?”

  1. November 15, 2023 at 12:46 pm, Angela Golden said:

    This is so true, we have a PBM for costs and only one medication do we use it for out of 5 prescriptions as GoodRX and/or SAMS club pharmacy prices are cheaper than our co-pay. Pretty ridiculous that our employer pays for the PBM (or we do in premiums). Thanks for this reporting to help shed light on this continuing problem. Heres hoping the FTC actually does something about this.