June 21, 2024

The New York Times has begun a new series about how pharmacy benefit managers prioritize their own interests at the expense of patients, employers, and the public. Part one, entitled “The Opaque Industry Secretly Inflating Prices for Prescription Drugs,” was published June 21, 2024. According to the Times:

“The three largest pharmacy benefit managers, or P.B.M.s, act as middlemen overseeing prescriptions for more than 200 million Americans. They are owned by huge health care conglomerates — CVS Health, Cigna and UnitedHealth Group — and are hired by employers and governments.

“The job of the P.B.M.s is to reduce drug costs. Instead, they frequently do the opposite. They steer patients toward pricier drugs, charge steep markups on what would otherwise be inexpensive medicines and extract billions of dollars in hidden fees, a New York Times investigation found.”

The Times noted the size of these companies and their influence:

“If they were stand-alone companies, the three biggest P.B.M.s would each rank among the top 40 U.S. companies by revenue. The largest, Caremark, generates more revenue than Ford or Home Depot.

“Because of recent mergers, they are becoming more dominant, collectively processing roughly 80 percent of prescriptions in the United States. In 2012, the figure was less than 50 percent.”

One of the concerns reported by the Times involves the use of brand-name drugs versus generics:

“Perhaps the clearest example of how the P.B.M.s find creative ways to profit is Humira, the blockbuster medication for conditions like arthritis.

“After two decades of the brand-name drug being the only version available, lower-cost alternatives came on the market in 2023. Collectively, employers, insurance programs and patients stood to save up to $6 billion a year by switching to copycat drugs, according to the data company IQVIA.

“But P.B.M.s would lose money from switching. Humira had become a big moneymaker for P.B.M.s, in large part because its manufacturer, AbbVie, was shelling out hundreds of millions of dollars in fees to the benefit managers’ G.P.O.s. Those fees would vanish if the P.B.M.s switched patients off Humira.

“The P.B.M.s moved slowly. In March, 14 months after the first cheaper version became available, 96 percent of prescriptions for the drug in the United States were still for the brand-name version, according to IQVIA.”

World Health Systems Facts is a project of the Real Reporting Foundation. We provide reliable statistics and other data from authoritative sources regarding health systems and policies in the US and sixteen other OECD member nations.

Page last updated June 21, 2024 by Doug McVay, Editor.