Scrutiny of PBMs and Use of New Overseas Contracting Entities Continues

A bipartisan pharmacy benefit manager reform bill was recently approved in a Senate committee and sent to the full Senate to ban pharmacy benefit manager tactics, such as spread pricing and clawback fees, and heighten transparency of the industry.

The legislation would ban the tactic PBMs use called “spread pricing,” where the manager charges payers more for a drug than what they reimburse a pharmacy, thus pocketing the difference, a summary of the bill said.

The legislation would ban the tactic PBMs use called “spread pricing,” where the manager charges payers more for a drug than what they reimburse a pharmacy, thus pocketing the difference, a summary of the bill said.

In a landmark lawsuit , Ohio Attorney General Dave Yost accuses pharmacy benefit managers Express Scripts and Prime Therapeutics of using a little-known, Switzerland-based company to illegally drive up drug prices and ultimately push those higher costs onto patients who rely on lifesaving drugs such as insulin.

This collusion, the lawsuit maintains, has been made possible by PBM market consolidation, which has left the three largest PBMs, including Express Scripts, in control of more than 75% of the drug market and the three next largest in control of much of the rest.

In addition to Express Scripts, Prime Therapeutics, Ascent and Humana Pharmacy Solutions, Yost’s lawsuit names as co-defendants:

  • Cigna Group, parent company of Express Scripts
  • Evernorth Health, another subsidiary of Cigna
  • Humana, parent company of Humana Pharmacy Solutions

 

Takeaway: New PBM contracting entities, often categorized as group purchasing organizations, add another obstacle to industry transparency