Pharmacy benefit managers (PBMs) have recently been getting more attention and scrutiny for the role they play in increasing drug costs. This is quite welcome; for far too long these organizations have operated under the radar, despite their misbehavior and the lack of regulation and transparency in their markets. Last week the Pharmaceutical Care Management Association (PCMA), the national association representing PBMs, released a study claiming that there is no evidence of correlation between drug rebate levels and increasing prescription drug costs among the top 200 brand drugs.
The goal of the study is to exculpate PBMs from any blame for high drug prices. Over the past several months drug manufacturers and PBMs have pointed fingers, blaming the other side for skyrocketing costs while disclaiming any responsibility. The report, conducted for PCMA by Visante, finds that rising prices drugmakers set on individual drugs are not connected to rebates negotiated between PBMs, and drugmakers continued to raise prices even when rebates were low in major drug categories.
But this analysis fails to include a very important point. PCMA’s argument that drug prices go up even when rebates are low is true, but it falls right in line with formulary competition. Formularies are the lists giving details of the medicines that may be prescribed and covered by various companies. If rebate percentages are low, higher drug prices mean the drugs get better positions of the formulary. Therefore this argument is misleading and doesn’t support PBMs’s arguments that their rebates aren’t to blame for higher drug prices.
In recent years, rebates paid to PBMs and PBM list prices for prescription drugs have both gone way up. This means that consumers are paying more for drugs and PBMs are pocketing the greater profits. Policymakers should not be fooled by this attempt at deflection.