Health

Report Shows PBM Profits Grow As Sector Consolidates

New research shows that pharmacy benefit managers become more profitable as the sector consolidates.

The PBMs, which negotiate discounts with drug manufacturers on behalf of payers, create pharmacy chains and reimburse those pharmacies, are joining forces with major insurers and pharmacies. This helped boost PBM’s gross profit from PBM-owned postal services and specialty pharmacies to $ 10.1 billion in 2019, up 13% from $ 8.9 billion in 2017, according to the PBM Accountability Project. analysis financial reports, government reports, research and reviews.

PBM’s gross profit during this period grew 12%, from $ 25 billion to $ 28 billion.

“This is a reflection of the ability of these vertically integrated companies to list prescriptions on their forms to be completed by affiliated specialty and mail order pharmacies,” said Mark Blum, America’s Agenda CEO, co-founder of the PBM Accountability Project, which is supported by pharmacists. , patient advocacy groups and unions, among other stakeholders. “Vertical integration makes it meaningless to negotiate between stakeholders across the prescription drug supply chain — it maintains a vertical stream of revenue and profit. In the end, a self-financed health plan pays all the costs. ”

State and federal and regulatory legislators have pushed for PBMs to pass concessions agreed with pharmaceutical companies, employers, and the payers they serve to reduce drug costs. But as the report shows, PBM was able to offset the decline in its rebate revenue by increasing administration fees.

Gross profit from unallocated administrative fees paid by manufacturers for services provided by PBM increased 51% from $ 3.8 billion in 2017 to $ 5.7 billion in 2019.

“PBMs are very easy to switch to other sources of income,” said Blum. “As the private sector becomes more savvy about pass-through discounts and the threat of regulation and litigation increases, PBMs stopped maintaining discounts and increased administrative fees. Through our surveys, we learned that they intend to continue to do so with other payer fees and self-financing plans. “

The Pharmaceutical Care Management Association, representing PBM, criticized the report, saying it is driven by “special interests that advance a program that will increase costs.” The association said in a statement that PBM has a proven track record of reducing the cost of prescription drugs for clients and patients.

PBM say one of their most valuable offers is negotiating discounts with drug manufacturers. But that role could be weakened if the Recovery Efficiency Act becomes law, industry observers say.

President Joe Biden’s current version of the Act, recently passed by the House of Representatives, empowers HHS to negotiate with pharmaceutical companies the price of a small amount of high-value drugs without generic or biosimilar competitors.

“For these drugs, PBM will really not be in negotiations with drug manufacturers,” said Paul Ginsburg, professor of health policy at the University of Southern California and senior fellow at USC’s Schaeffer Center for Health Policy and Economics. and Senior Fellow, Non-Resident Brookings Institution. “PBMs will continue to play a role, but really only in handling requirements. This may have some effect on profitability. “

Over the past three years, all three of the largest PBMs have formed their own group purchasing organizations to negotiate discounts internally. This increased complexity and less transparency could allow these supply chain organizations to retain a larger share of rebates, fees and other price concessions, the report said.

Gross margins from “other sources,” including pricing, pharmacy fees and chargebacks, fees charged to payers, and other non-administrative fees charged to manufacturers, rose nearly 26%, from $ 8.5 billion in 2017 to $ 10 billion. $ 7 billion in 2019.

Industry watchers said while federal regulators are keen to enact stricter vertical integration rules that could cap some of this additional revenue, these huge conglomerates will be difficult to roll out.

“Information asymmetries and financial opacity in the prescription drug supply chain create many potential opportunities for PBM to squeeze money,” said Ge Bai, a Johns Hopkins University professor of accounting with studied PBMs. “When the door is closed, PBM will find a creative way to open a new window.”


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button