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The Hidden Impact of Pharmacy Benefit Managers

Are the middlemen who handle health insurers’ prescription drug plans saving patients money – or reducing their access to critical medication?  

Madelaine Feldman, MD, explores that question in “Pharmacy Benefit Managers’ Impact on Patient Access,” a new paper from the Alliance for Patient Access.  

The Role of Pharmacy Benefit Managers 

Hired by insurance companies, pharmacy benefit managers negotiate drug prices with manufacturers and manage prescription drug claims on behalf of health plans. They also develop health plans’ formularies – lists of drugs that an insurance company covers. But their decisions about which drugs to cover or prefer often prioritize a single criteria – the size of the rebate that comes from a drug’s manufacturer.   

That money, Dr. Feldman explains, does not always find its way back to the patient. 

Worse, the drive for higher and higher rebates creates a perverse incentive for companies to raise the list price of their drugs – because a higher price means a higher rebate for pharmacy benefit managers. Patients, however, may wind up paying more out of pocket, especially if their health plan requires them to pay coinsurance, which is a percentage of the list price of the drug. 

Driving Patients to “Preferred” Drugs 

With formularies in place, pharmacy benefit managers steer patients to medications that offer the middleman the highest rebate instead of the medications that are best for the individual patient. To do so, pharmacy benefit managers use practices known as utilization management. 

Three common utilization management tactics are: 

  • Prior authorization. Clinicians must obtain the health plan’s approval before their patients can get coverage for their prescribed medication. The process can delay patient care and impose a significant administrative burden on the clinician’s office, especially if the initial request gets denied. 
  • Step therapy. Patients must “fail first” on medications preferred by the health plan before getting coverage for the medication their clinician has prescribed. Patients may experience worsening symptoms and new side effects. 
  • Non-medical switching. Health plans drive a stable patient off their current medication and onto a drug preferred by the pharmacy benefit manager in an attempt to boost profits. Patients may face treatment disruptions, re-emerging symptoms and other health complications.  

Moving Toward Solutions 

Federal and state policymakers have been paying more attention to pharmacy benefit managers in recent years, and federal lawmakers have introduced a number of bills this Congress to reign in PBM practices. But while policymakers have implemented some laws aimed at pharmacy benefit managers, the middlemen continue to dodge these policies with loopholes, such as reclassifying rebates as fees. The solution? Pharmacy benefit managers could be paid a fixed fee, Dr. Feldman suggests, and patients could pay coinsurance based on the net cost of the drug instead of the list price.

Transparency is vital so patients can receive affordable and timely care.  

Learn more by reading “Pharmacy Benefit Managers’ Impact on Patient Access.”