Related: PBMs, the brokers who control drug prices, finally get Washington's attention

Here are the three factors on which Fiedler, Adler and Frank base their conclusion that PBM reform may not be the panacea lawmakers and others are hoping for.

Mandating that PBMs pass 100% of the rebates collected from drug makers to health plans and restricting spread pricing models — as some of the bills under consideration in Congress would do — are "unlikely to save much money for payers since PBMs could likely extract revenue from payers in other ways," the fellows write. "It might even backfire by weakening PBMs' incentives to aggressively negotiate prices."
With three firms — CVSCaremark, Express Scripts, andOptumRx — controlling 79% of the PBM market, PBMs have the market power to earn excessive profits, the fellows admit, adding that increased competition could reduce those profits. That said, they contend, "even eliminating all PBM profits would only reduce total drug-related spending by several percentage points. Achieving larger spending reductions would likely require more fundamental market changes such as changing intellectual property protections for drugs or changing how drug prices are regulated."
Because cost-sharing for prescription drugs often is calculated using point-of-sale prices that don't include some PBM-negotiated discounts — especially rebates — the practice may not have much of an impact on patients' overall cost-sharing burdens, according to the fellows. "Rather," they note, "where patients face excessive cost-sharing, the main cause is likely deeper market or regulatory failures, such as consumer difficulties in choosing insurance plans and adverse selection. Addressing those issues is likely to require solutions targeted at those broader problems — such as directly regulating how much cost-sharing insurance plans can impose, subsidizing more generous coverage, or improving risk adjustment systems — not solutions specific to rebates or PBMs."

Read the entire brief here.

Instant Insights /

High drug costs: PBM reforms in Congress may have only 'modest' effect at best

More From HR Executive

Related Stories

Recommended For You