These days, the same big health care conglomerate could own your PBM, insurer, pharmacy and even your doctor’s office. Middlemen now control what medicines you can get, what you pay at the pharmacy counter, what pharmacy you can you use and what hoops you must jump through to get the medicine your doctor prescribed.
Today, PhRMA launched a new advertisement highlighting how middlemen, like pharmacy benefit managers (PBMs) and the giant health care companies that own them, are further consolidating their control over the health care system. When a few big health care conglomerates abuse their power to boost their profits, patients pay the price.
Higher costs for patients
There’s mounting evidence that vertical integration drives up costs for patients and the government. A recent WSJ investigation showed PBMs are marking up the price of some specialty generic drugs dispensed at their specialty pharmacies by thousands of dollars. According to the FTC, pharmacies affiliated with the three largest PBMs made $1.6 billion on only two cancer drugs over the course of three years. Further, despite insurers and PBMs receiving significant rebates and discounts, often 50% or more, patients rarely benefit directly from these savings, according to the Congressional Budget Office’s Director of Health Analysis.
Less access to medicines
PBMs make money off fees and rebates tied to the price of medicines, which means they have a perverse incentive to prefer higher-priced medicines over lower-cost alternatives. Experts say this can lead them to deny or limit coverage of lower-cost medicines, like biosimilar and generics, driving up costs for everyone while their profits soar. In fact, the three largest PBMs excluded roughly 1,200 medicines from their commercial formularies in one year alone. At the same time, insurers routinely delay or deny care and put medicines out of reach with onerous utilization management tactics like prior authorization or step therapy.
More profits for big health care companies
Spending on medicines is padding the profits of middlemen and subsidizing many parts of the health care system, often at the expense of patients. Half of every dollar spent on medicines goes to middlemen and others that don’t make the medicine - like health insurance companies, PBMs, big chain pharmacies, and others.
Our new ad is part of a growing chorus of voices calling on policymakers to enact reform on this bipartisan issue. Congress can protect patients and rein in the middlemen by passing reforms that increase transparency, ensure medicine savings go directly to patients, not middlemen, and break the link between PBM compensation and medicine prices.
Caroline Dunne
Caroline Dunne serves as a Director of Public Affairs at PhRMA, where she leads communications strategies and initiatives for the organization's cost and value priorities. She brings extensive experience in advocacy strategy, with a background that spans gubernatorial and presidential politics. Caroline is passionate about contributing to an industry whose innovations have had a meaningful impact on her family's life.
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When middlemen own it all
PBMs/Insurance
When middlemen own it all, patients pay the price
When middlemen own it all