Pharmacy Benefit Managers Increasing The Cost of Medication
Pharmacy Benefit Managers Increasing the Cost of Medication: Understanding the Issue
Pharmacy Benefit Managers (PBMs) are companies that manage prescription drug programs for health plans, insurance companies, and self-insured employers. PBMs are responsible for negotiating prices with drug manufacturers, setting reimbursement rates for pharmacies, and creating formularies, which are lists of medications that are covered by a particular health plan. While PBMs were initially created to help reduce the cost of prescription drugs, some have argued that they are actually contributing to the rising cost of medication in the United States.
One of the ways that PBMs increase the cost of medication is by using a practice called "spread pricing". Spread pricing occurs when PBMs negotiate a lower price for a medication with a drug manufacturer, but then charge the health plan or employer a higher price for the same medication. The difference between the lower price negotiated with the manufacturer and the higher price charged to the health plan or employer is called the "spread". PBMs are not required to disclose the amount of the spread, which can be significant. This means that health plans and employers may be paying much more for medications than they need to, which can lead to higher premiums or cost-sharing for patients.
Another way that PBMs increase the cost of medication is through rebates. PBMs negotiate rebates with drug manufacturers, which are discounts off the list price of a medication. While these rebates can help reduce the overall cost of medications, they can also lead to higher prices for patients. This is because PBMs may encourage the use of medications that offer higher rebates, rather than medications that are more affordable or effective for patients. Additionally, PBMs may keep a portion of the rebate for themselves, rather than passing the full savings on to the health plan or employer.
PBMs have also been accused of creating and promoting formularies that favor higher-priced medications over lower-priced alternatives. This can lead to patients being prescribed more expensive medications, even when a lower-priced alternative is available and just as effective. PBMs may do this because they receive a percentage of the amount paid for each prescription, which means that they may have an incentive to promote higher-priced medications.
Overall, the issue of PBMs increasing the cost of medication is complex and multifaceted. While PBMs may have originally been created to help reduce the cost of prescription drugs, some argue that their practices are actually contributing to the rising cost of medication in the United States. If you are concerned about the cost of your medications, it's important to speak with your healthcare provider and insurance company to understand how PBMs are affecting your prescription drug coverage. Additionally, you may want to consider advocating for increased transparency and accountability in the PBM industry, so that patients can better understand how their prescription drug coverage is being managed.
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