Pharmacy benefit managers
PBMs reap billions of dollars in rebate revenue in return for putting particular products on lists of covered drugs. The administration is essentially proposing to make those payments illegal, at least for Medicare and Medicaid plans.
PBMs, which claim they control costs by negotiating with drugmakers, might have to go back to their roots – processing pharmacy claims for a fee. After recent industry consolidation into a few enormous companies, on the other hand, they might have the market power to charge very high fees, replacing much of the lost rebate revenue.
PBMs “are concerned” that the move “would increase drug costs and force Medicare beneficiaries to pay higher premiums and out-of-pocket expenses,” said JC Scott, CEO of the Pharmaceutical Care Management Association, the PBM lobby.
Insurers, who often receive rebates directly, could also be hurt financially.
“From the start, the focus on rebates has been a distraction from the real issue – the problem is the price” of the drugs, said Matt Eyles, CEO of America’s Health Insurance Plans, a trade group. “We are not middlemen – we are your bargaining power, working hard to negotiate lower prices.”
Patients without chronic conditions and high drug costs
Lower out-of-pocket costs at the pharmacy counter would be financed, at least in part, by higher premiums for Medicare and Medicaid plans paid by consumers and the government. Premiums for Medicare Part D plans could rise from $3.20 to $5.64 per month, according to consultants hired by the Department of Health and Human Services.
“There is likely to be a wide variation in how much savings people see based on the drugs they take and the point-of-sale discounts that are negotiated,” said Elizabeth Carpenter, policy practice director at Avalere, a consultancy.
Consumers who don’t need expensive drugs every month could see insurance costs go up slightly without getting the benefits of lower out-of-pocket expense for purchased drugs.
Other policy changes giving health plans more negotiating power against drugmakers would keep a lid on premium increases, administration officials argue.
is a nonprofit national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation that is not affiliated with Kaiser Permanente.