BLOG: FTC targets pharmacy benefit managers: PBMs and insurers blame big pharma
Click Here to Manage Email Alerts
Key takeaways:
- The Federal Trade Commission published a report on pharmacy benefit managers and inflated drug costs.
- PBMs say that pharmaceutical companies are responsible for high out-of-pocket patient costs.
In a shocking display of “where ya been?” the Federal Trade Commission has “discovered” that pharmacy benefit managers drive up the cost of medications.
pharmacy benefit managers (PBMs) begs to differ, laying the blame for high out-of-pocket patient costs at the feet of pharmaceutical companies. They are basically playing a game of which came first, the chicken or the egg, which is pretty much nonsense because the PBMs and the insurance companies that own them are running the whole farm.
All the FTC had to do to figure this out was read “Follow the money, part 3” from March 2018 in which I explained the PBM grift in terms even a washed-up ex-football player could understand (that would be me).
Seriously, blaming the pharmaceutical industry for the exorbitant list prices for drugs of all kinds is really rich. (See what I did there?!) In the most basic terms, for a drug company to get its branded medication on an insurance plan’s formulary, it must offer the PBM that administers the plan a big “rebate” on the price of the medication. The higher the list price, the higher the “rebate.” How does this lead to higher out-of-pocket costs for your patient? The math is as simple as it is diabolical: Your patient’s co-pay is calculated from the inflated list price, not the discounted post-“rebate” price. Oh, and of course, if your patient hasn’t met their deductible, they are on the hook for whole enchilada, the full list price.
To be fair, the behind-the-scenes math that makes all this so profitable for both the PBM and insurance company is complex enough to make even that guy they made A Beautiful Mind about break into a cold sweat. Maybe that’s why it took so long for the FTC to get in the game. I don’t have a whole lot of confidence in a federal bureaucracy that brought us gems like HIPAA and Meaningful Use, but a boy can dream. Perhaps the new Medicare dictum that caps out-of-pocket expenses for seniors at $2,000 per year will help.
That is, until the PBMs and insurance companies open up their 2025 chicken coops.
Reference:
- Pharmacy benefit managers: The powerful middlemen inflating drug costs and squeezing Main Street pharmacies. https://www.ftc.gov/reports/pharmacy-benefit-managers-report. Published July 9, 2024. Accessed July 15, 2024.
Collapse