Dr Martin Makary on How PBMs Impact Drug Pricing, Transparency

Pharmacy benefit managers (PBMs), have historically been a black box for those paying into them, partly because medications are confusing, explained Martin Makary, MD, MPH, a surgical oncologist and chief of the Johns Hopkins Islet Transplant Center.

How are pharmacy benefit managers impacting drug pricing, as well as transparency, in the US?
PBMs, or pharmacy benefit managers, have been historically a black box for those paying into them, partly because medications are confusing. How do you understand the names of thousands of medications, the brands, the generics, the biosimilars, at different doses and different frequencies? How does a CEO [chief executive officer] of an auto dealership understand all of that? That’s part of the reason why it’s been such a black box.

And then, the spreads on the individual medications have been highly variable depending on the PBM, if it’s a more fair and honest pricing PBM or a PBM that sees the opportunity to price gauge in that black box of not understanding what these medications even are.

There’s a lot of other games. Moving everyone to mail order, which the government, in part, created that game when they suggested compliance was an important factor. Compliance is an important factor, but we’ve got patients now getting medications sent to their home they never wanted or needed. But, the mail order game has sent refill requests to our offices as physicians saying refill request for Joe Smith. We’ve just been traditionally signing these things without reading them because we assume the patient requested a refill. The patient didn’t request a refill sometimes, and we’re signing them anyway, but when they’re on mail order, the meds get sent and sold even though the patient didn’t need them. We’ve seen record numbers of medications that patients don’t need and don’t want shipped to their homes, bags of medications getting filled in primary care physicians when doctors take them off medications because the patients bring them in and the doctor says you don’t need to be on this.

There are a lot of money games in the PBM space. Our movement has been trying to reward the good PBMs in the market. Yes, there are good PBMs in the market, but a lot of PBMs will respond to a request for fair pricing. If a business says we want an administrative fee per prescription of $2.50, we want a 100% pass through of rebates from pharma, they can often negotiate a good PBM contract with many different PBMs. The idea that PBMs are all evil or all good, I think is an oversimplified approach.

Employers have a tremendous opportunity to negotiate fair and honest terms around specialty drugs, the mail order games, the spreads, and the rebates, and those 4 issues are issues that I tackle in the book “The Price We Pay” to try and inform businesses about how they can get a better deal on their drugs.

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