PBMs Impact on the U.S. Government

The U.S. government is the single largest payer for prescription drugs. Programs such as Medicare Part D, TRICARE, and the federal employee health benefit program (FEHBP) are all taxpayer-funded programs that utilize PBMs.

Yet even the federal government can have difficulties determining whether they are getting proper value from PBMs. During a 2009 Congressional hearing, Patrick McFarland, inspector general at the Office of Personnel Management testified "There's a good chance we're not getting a good deal...We can't find out information such as the incentive pay, rebate pay, volume discount pay, administrative fees [of PBMs]. We can't find that information out, because we can't audit that; it's not available to us now."

PBMs also contribute to waste in the prescription drug marketplace through "auto ship" mail order policies, which add additional costs. A 2013 report by the Taxpayers Protection Alliance (TPA) documented several instances of medication waste, and noted in the Medicare program that "automatic delivery practices are potentially generating significant waste and unnecessary additional costs for beneficiaries and the Part D program overall."

NCPA's "Waste Not, Want Not" compilation has documented additional examples of mail order waste, including taxpayer-funded programs.

Congress must demand greater disclosures by PBMs to ensure government programs are not overpaying for prescription medications. As TPA noted in its report's conclusions "taxpayers, the ones left to pay for these bills, deserve transparency."

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