PBMs under fire for drug prices defend their worth

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The pharmacy benefit management system is complicated. Just ask Shelly Sanchez of Elixir, a PBM owned by the Rite Aid Corporation.

Elixir vice president of strategic solutions Shelley Sanchez

Elixir vice president of strategic solutions Shelley Sanchez

Permission granted by Elizir/Shelly Sanchez

“PBMs started really as claims processing,” Sanchez, who is Elixir’s vice president of strategic solutions, says. “When people ask me, what on earth do you do? That’s always a tough question to answer.”

The reality is that PBMs do a lot more than negotiate prescription drug costs and process prescriptions. But they’ve gained a reputation as the purveyors of rising drug costs in the US, according to drugmakers and lawmakers who often point fingers at a lack of transparency within the industry’s inner workings.

To curb drug costs, US Sens. Maria Cantwell (D-Wash.) and Chuck Grassley (D-Iowa) introduced a bill this week called the Pharmacy Benefit Manager Transparency Act of 2022 to “empower the Federal Trade Commission and state attorneys general to stop unfair and deceptive PBM business practices. “

These lawmakers, as well as pharma companies and the Pharmaceutical Research and Manufacturers of America (PhRMA) trade group often place blame on PBMs for charging more for prescription drugs and profiting as “middlemen” in the process. And PBMs do in fact make a profit by facilitating and negotiating prices for drugs as they manage those medication benefits.

Lack of sunlight

One of the main issues is that much of what a PBM does happen in the shadows, US Sen. Rick Blumenthal (D-Conn.) said in a May 5 Senate hearing on prescription drug prices.

“PBMs will argue that rebates lower the cost of your insurance, but truly we have no idea whether this is accurate because PBMs shroud this information in secrecy,” Blumenthal said. “If these rebates are lower the cost of healthcare, that’s news to patients — premiums and deductibles have not gone down and insurance dollars instead they are eating into Americans’ hard-earned and savings.”

PBMs paint themselves as a line of defense between consumers and high drug costs set by the pharma companies.

“The consumer is benefiting,” said JC Scott, president and CEO of the PBM trade group Pharmaceutical Care Management Association (PCMA), at the hearing. “The cost of the drug itself is too expensive — that is a fundamental starting point that I think we can all agree on.”

The CEO of Cigna, David Cordani, which operates Express Scripts as one of the largest PBMs in the US, said in January that the blame does not fall on them.

“I believe very passionately that pharmacy benefit managers and the legacy of those have created a lot of value from a societal standpoint,” Cordani told Yahoo Finance. “Access to care, care coordination programs, the movement from brand to generic was led by the PBMs long before Cigna and Express Scripts came together.”

Changing with the times

As drugs become more complex and specialized, the services that PBMs provide go deeper than just negotiating price, Sanchez says.

“Another term we’ve often used is a ‘healthcare connector’ — by the nature of that, yes, we are sort of in the middle of the process, but we’re doing that because we’re connecting the pharmaceutical manufacturer relationships, Sanchez says. “We’re connecting the plan sponsors with the members themselves, oftentimes.”

And because of the vastly complex healthcare system in the US, Sanchez says legislation needs to be informed by all of the stakeholders that make up the network that ultimately delivers drugs to patients.

“The biggest change in healthcare tends to come from DC, but I always think about having it come from all different angles,” she says. “All of the stakeholders in this complex healthcare system have members voicing how it actually affects them when the price of the drug is egregious.”

“So as drug treatments have evolved, the management of patients with these conditions has evolved exponentially, and specialty pharmacies have had to evolve with that level of care.”

Jordan Maddocks

Director of clinical outcomes and services at Elixir Pharmacy

While PBMs find themselves under fire from many directions at once, they argue that for patients, they’re the glue that holds the healthcare system together.

Where PBMs particularly become important is in the specialty pharma space, bringing cutting-edge drugs to patients with rare and serious conditions, Sanchez says.

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