Reduce drug prices by eliminating PBM rebates

  • The Hill | by: Robert M. Goldberg |
  • 02/15/2017
Why are pharmacy benefit management companies -the businesses that put together the drug benefits for most Americans the latest target of drug price critics? PBMs generated nearly $130 billion in rebates – essentially cash that drug companies pay PBMs to reduce the cost of their products. 
That’s nearly 30 percent of the $349 billion in gross revenues the drug industry generates each year. On top of that PBMs charge the sickest patients an average of 40 percent of the list price of medicines.  So why not use these rebates to reduce drug costs. 
The PBMs claim that $130 billion in rebates do lower drug prices for consumers.

In fact, they pass the rebates directly to insurance companies and some businesses that contract with the PBM. In turn, the health plans use their cut for anything they want.  For example, a lawsuit against Anthem claims that the insurer used billions in rebate dollars to buy back its stock in preparation for its failed merger with Cigna.

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