Pharmacy Benefit Managers (PBMs) are middlemen between drugmakers and insurers, employers, and government entities that purchase prescription drugs. They play a crucial role in negotiating prices, affordability, and access to medication. However, the lack of competition among PBMs has led to high list prices for patented drugs.
The current regulatory environment allows overly large PBMs to engage in anticompetitive practices, accumulating excessive profits and charging customers high fees. The largest PBMs have merged with health insurers, reducing potential competitors and limiting market diversity. This concentration of power leads to inflated rebates, higher net prices for insurers, and increased costs for patients.
Smaller PBMs can negotiate lower net prices for patented drugs, but their limited scale is often overlooked. Increasing competition within the PBM marketplace requires a larger number of smaller PBMs and may force large insurers to divest their PBM units.
The problem lies not with PBMs themselves but with too much market power concentrated in few hands. A more competitive and transparent market for PBM services can benefit customers and society. By promoting sensible regulation, vocal consumers, and competition among PBMs, we can address the root cause of high drug prices and create a fairer system.
Source: https://cobbcountycourier.com/2024/12/what-are-pharmacy-benefit-managers-a-health-economist-explains-how-lack-of-competition-drives-up-drug-prices-for-everyone