This post explains how pharmacy benefit managers (PBMs) in the U.S. influence the cost of prescription drugs. PBMs act as intermediaries between drugmakers, insurers, and pharmacies, managing drug claims and formularies, which are lists of drugs covered by insurance. The complexities within this system can impact how much consumers pay for their prescriptions.
- Formularies and Tier Systems: PBMs create formularies that categorize drugs into tiers, with lower tiers having cheaper drugs and higher tiers having more expensive ones. Insurance companies cover more of the cost for lower-tier drugs, reducing expenses for consumers.
- Rebates: Drugmakers offer rebates to PBMs to have their drugs placed in lower tiers, increasing the drugs’ accessibility to patients and potentially boosting sales. The more expensive the drug, the higher the rebate tends to be.
- Transparency Issues: A lack of transparency exists in the relationship between drugmakers and PBMs, making it difficult to determine how much of the rebate is passed on to the consumer. PBMs might pocket a significant portion of the rebate.
- Impact on Drug Prices: To cover the costs of rebates, drugmakers sometimes increase the list price of their drugs, which can push overall prices higher. This system might contribute to the high cost of prescription drugs for consumers.