PBMs Impact on Patients

PBMs administer prescription drug benefits for over 253 million people, with three large companies (Express Scripts, CVSHealth, and OptumRx) accounting for nearly 80% of the market. While PBMs contract with plan sponsors and pharmacies, they ultimately affect the cost of and access to medications for a vast majority of prescription drug plan beneficiaries.

PBMs restrict patient choice of pharmacy through limited networks (usually favoring a large chain pharmacy), incentivizing the use of mail order pharmacies (commonly owned by the PBM) or in some cases both. Such narrow networks can create access issues for people who live in rural and some urban areas, particularly seniors participating in Medicare Part D who may be forced to drive many miles to reach a network pharmacy.

Additionally, the nontransparent nature of PBMs can cause patients to incur additional costs. For Medicare patients, hidden "DIR" fees charged to their pharmacy long after the prescription is filled have the effect of inflating costs to beneficiaries. As a recent analysis by the Centers for Medicare and Medicaid Services (CMS) noted, these fees can affect Medicare beneficiary cost sharing levels and push them into and through the coverage gap (or "donut hole") prematurely.

Some PBMs have also increased costs to patients through a process known as co-pay clawbacks, where the PBM requires the pharmacy to collect a co-pay from the patient that his higher than the reimbursement the PBM pays the pharmacy for the same prescription. The PBM later recoups and retains the difference from the pharmacy. In many cases, the patient could have lowered their out of pocket costs by purchasing the medication without insurance. Unfortunately, many PBMs impose gag clauses in their contracts that prohibit pharmacies from proactively informing patients of this fact. This was confirmed in a recent Bloomberg article which noted "Contracts obtained by Bloomberg prohibit pharmacists from publicly criticizing benefit managers or suggesting customers obtain the medication cheaper by paying out of pocket."

Such practices increase costs and reduce pharmacy access for patients. Patients may be unaware of the role PBMs play in the prescription drug marketplace, but they should understand that the lack of transparency into some PBM practices may be costing them.

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