Pharmacy Benefit Managers Have Become Too Powerful
A Threat to Patient Care
For too long, pharmacy benefit managers have profited at the expense of patients living with chronic conditions. Despite efforts in Washington, D.C., and over 20 states, including Illinois, to address these practices, these benefit managers continue to meddle in our health system, using schemes that worsen or block patient access to care to increase their bottom lines.
The Problem with Pharmacy Benefit Managers
Health insurance companies hire benefit managers to work between health plans and drug manufacturers to negotiate discounts on medications. As a result, they have become one of the most powerful stakeholders in the health industry. Three pharmacy benefit managers processed 80% of prescription drug claims in 2023.
Misaligned Incentives
Benefit managers dictate, with little transparency or oversight, which medications insurers cover, how much patients pay, and which administrative hoops patients and providers must jump through to access prescribed treatments. Their decisions aren’t always based on the best interest of the patient, but instead on their own profits.
Making a Profit from Patient Suffering
Benefit manager revenue is directly tied to the list price of medicines, so they can earn more if the list price of the drug is higher. These misaligned incentives sometimes lead to patients footing expensive bills tied to a cost higher than what their own health plan paid for a medication.
The Impact on Patients
Pharmacy benefit managers play an outsized role in determining which medications a patient can access. However, their decisions can be detrimental to patient health. When patients face access barriers, such as out-of-pocket costs becoming too high, they are more likely to abandon their treatment plan, which can lead to higher medical costs for the individual and health system.
The Need for Reform
Pharmacy benefit managers have long flown under the radar of scrutiny, but lawmakers, regulators, and other stakeholders at the state and federal levels are increasingly investigating the role of these middlemen. Several congressional committees have held hearings to question the largest pharmacy benefit managers on how their practices impact Americans’ access to medicines.
A Call to Action
State lawmakers have recognized the need to address how benefit manager practices negatively impact local patients and businesses. Federal lawmakers in the 119th Congress must pass comprehensive reforms to regulate how benefit managers operate. Policies to reform the ability of benefit managers to profit from medication list prices and rectify misaligned incentives that lead to increased patient costs are critical to address their predatory role in our health system.
Conclusion
Without action to advance proposals that would help patients better access the medicines they need, patients in Illinois and across the country will continue to be subject to pharmacy benefit managers’ “profit over patients” model. In the new year, Congress must act on reform.
FAQs
* What are pharmacy benefit managers?
Pharmacy benefit managers are companies that work between health insurance companies and drug manufacturers to negotiate discounts on medications.
* What is the problem with pharmacy benefit managers?
Pharmacy benefit managers use schemes that worsen or block patient access to care to increase their profits, rather than focusing on patient health.
* What is the impact on patients?
Pharmacy benefit managers’ decisions can lead to patients facing access barriers, such as out-of-pocket costs becoming too high, and abandoning their treatment plans.
* What can be done to address the problem?
Comprehensive reforms are needed to regulate how benefit managers operate, including reforms to the ability of benefit managers to profit from medication list prices and rectifying misaligned incentives that lead to increased patient costs.
