The Employer's Guide Blog for Overseeing PBMs

The Definition of Oversee: to watch over and direct (an undertaking, a group of workers, etc.) in order to ensure a satisfactory outcome or performance.

Op-ed: PBMs are Driving Up Costs and Lowering Quality Care in America

While there are certainly other factors that increase drug pricing, such as the lack of competition of generic drugs, fee-for-service care models and an absence of patient consideration at the policymaking level, PBMs have remained a central contributor. The already-complex relationship with PBMs becomes harder to demystify and potentially a cost multiplier because the rebate process is not transparent to physicians or patients.

Click to Learn More

In fact, we don’t know what percentages of rebates are kept by PBMs. That begs the question, was the PBM I worked with suggesting a brand-name drug so they would receive a higher rebate payment without any consideration for the patient’s well-being? My experiences make such a conclusion easy to consider.

If PBMs are consistently causing increases in drug prices, delaying treatment and limiting options for patients, why are they part of our health care system? PBMs were developed with good intentions: to help insurance and pharmaceutical companies provide affordable drugs to patients quickly. Unfortunately, that is not how PBMs operate anymore, which makes me think it’s time we rid our system of these unnecessary middlemen.

Tyrone’s Commentary:

There is no question that non-fiduciary PBMs have learned how to leverage the purchasing power of unsophisticated plan sponsors to their financial advantage. That proposition doesn’t change the fact that PBMs offer valuable services and deserve a reasonable return on those services. The key issue then are the hidden cash flows generated by non-fiduciary PBMs which drive up costs. I wonder if Dr. Price knows that 95% of all self-funded employers have no clue how much they pay a PBM for its services? Before you go there and say PBMs won’t divulge this information that is an excuse. There are PBMs who will offer this level of disclosure you just can’t drink the kool-aid of those who say it isn’t possible. Hence, the solution is not the elimination of PBMs, who offer valuable services, but to stop overpayments. Education is the best solution. It always baffles me when an entity or person suggests a solution to a problem when they stand to gain from their own recommendation. In short, it is self-serving for Dr. Price to suggest PBMs be removed from the supply chain. There are purchasers of PBM services who are better served going direct and there are others who are better off hiring a fiduciary-model PBM. The solutions to the problems in health care are rarely one-size fits all.

Continue Reading >>

Tyrone Squires, MBA, CPBS

I am the proud founder and managing director of TransparentRx, a fiduciary-model PBM based in Las Vegas, Nevada. We help health plan sponsors reduce pharmacy spend, by as much as 50%, without cutting benefits or shifting costs to employees.

Leave a Reply