The report shows that with industry consolidation, PBM’s profits have swelled
New research shows that with the consolidation of the industry, pharmacy welfare managers are more profitable.
On behalf of the payer, PBM negotiates rebates from drug manufacturers, creates a network of pharmacies, and determines reimbursements for these pharmacies. Join forces with major insurance companies and pharmaciesAccording to data from the PBM Accountability Project, this helped PBM increase the gross profit of PBM’s mail-order and specialty pharmacies to US$10.1 billion in 2019, an increase of 13% from the US$8.9 billion in 2017. analyze Financial records, government reports, research and investigations.
During this period, PBM’s gross profit increased from US$25 billion to US$28 billion, an increase of 12%.
“This reflects the ability of these vertically integrated companies to direct prescriptions filled by affiliated specialty pharmacies and mail-order pharmacies on their formulary,” said Mark Bloom, executive director of American Agenda, a founding member of the PBM Accountability Project.support pharmacist, Patient advocacy groups and unions, and other stakeholders. “Vertical integration makes negotiation between stakeholders in different links of the prescription drug supply chain meaningless-it keeps revenue and profit streams vertical. After all, self-funded health plans are paying the price for all this.”
State and federal legislators and regulators have Push PBM through concessions Negotiate with pharmaceutical companies to reduce drug expenditures to employers and payers they serve. But the report shows that PBM has been able to offset its declining rebate income by charging more management fees.
The gross profit of retained management fees paid by manufacturers for services provided by PBM increased by 51%, from US$3.8 billion in 2017 to US$5.7 billion in 2019.
“PBM can switch to different sources of income very easily,” Blum said. “As the private sector has become more savvy about rebate transfers, and the threat of regulation and litigation has increased, PBM has stopped retaining rebates and increased administrative costs. We learned through investigations that they intend to continue to do so, and at the same time provide payers and Pay other expenses. Self-funded plan.”
The Healthcare Management Association, which represents PBM, criticized the report, claiming that it was driven by “special interest groups that would increase costs.” The association said in a statement that PBM has a good track record in reducing the cost of prescription drugs for customers and patients.
PBM claims that one of their most valuable products is negotiating discounts with drug manufacturers. But industry observers say that if the “Rebuild Better Act” becomes law, this effect may be weakened.
The current version of President Joe Biden’s most recent legislation Passed by the House of Representatives, Will give HHS the right to negotiate prices with pharmaceutical companies for a few high-cost drugs that do not have generics or biosimilar competitors.
Paul Ginsberg, a professor of health policy at the University of Southern California and a senior researcher at the Shafer Center for Health Policy and Economics at the University of Southern California, said: “For these drugs, PBM does not negotiate with drug manufacturers.” Brookings Institution is a non-resident senior fellow. researcher. “PBM will still play a role, but it’s really only in claims processing. It may have some impact on profitability.”
In the past three years, all three largest PBMs Formed his own group buying organization Handle rebate negotiations internally. The report concluded that this increased complexity and reduced visibility may allow these supply chain entities to retain a larger share of rebates, fees and other price concessions.
“Other sources” gross profit, including spread pricing, pharmacy fees and rebates, fees charged to payers, and other non-administrative fees charged to manufacturers, increased by nearly 26%, from USD 8.5 billion in 2017 to 2019 10.7 billion US dollars for the year.
Although federal regulators are designed to impose Tighter vertical integration guidelines Industry observers said that this may limit some auxiliary income, but these large conglomerates will be difficult to dissolve.
“The information asymmetry and financial opacity in the prescription drug supply chain have created many potential ways for PBM to squeeze funding,” said Ge Bai, a professor of accounting at Johns Hopkins University. Have learned PBM. “When the door is closed, PBMs will find a creative way to open a new window.”