The Employer's Guide Blog for Overseeing PBMs

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CVS makes dubious case for rebates’ impact on drug prices

CVS faced heat throughout 2018 after revelations that its pharmacy middleman business billed taxpayers far more for Medicaid drugs than it paid to the pharmacies that dispensed them, charging three to six times the standard rate. Critics said that a lack of transparency was at the heart of problems with a system that CVS and other non-fiduciary pharmacy benefit managers said was saving taxpayers hundreds of millions of dollars.


“There is ample evidence via independent studies showing that drug-makers set and raise prices unrelated to the rebates PBMs secure on behalf of their clients,” CVS Chief Communications Officer Kathryn Metcalfe wrote in a letter to the editor.

Asked to support this claim, CVS provided two pieces of what it said was independent research. However, both were done by Visante, a consulting firm founded by a former executive of ExpressScripts, another of the big three PBMs, and one was for the Pharmaceutical Care Management Association, an industry-funded group. Asked who paid for the work and whether it had been peer-reviewed, CVS spokesman Michael DeAngelis punted.

An academic whose research has withstood the rigors of peer review said there is no such work regarding the impact of rebates on the price of prescription drugs — and for good reason. “I can’t point to a study where I can say, ‘Look for this set of drugs. We saw an increase in rebates and look, these drugs, their price went up.’

That study isn’t there because rebates are confidential or private information, so I as a professor don’t have access to data on the drug level on what rebates are there,” said Neeraj Sood, director of research at the University of Southern California’s Schaeffer Center for Health Policy and Economics.

“You and I ask, ‘Is (the amount PBMs are getting) a reasonable number, or should PBMs be making less than that?’ My research didn’t address that question,” Sood said, but he added that he is working on a study to try to find an answer.

Tyrone’s Commentary:

Any number above zero is an unreasonable amount for PBMs to be making off manufacturer revenue or rebates. PBMs deserve a nominal fee for its services not excessive overpayments regardless of the source.

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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.

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