How PBMs Are Driving Up Prescription Drug Costs

Americans are paying too much for prescription drugs.

It is a common, longstanding complaint. And the culprits seem obvious: Drug companies. Insurers. A dysfunctional federal government.

But there is another collection of powerful forces that often escape attention, because they operate in the bowels of the health care system and cloak themselves in such opacity and complexity that many people don’t even realize they exist.

They are called pharmacy benefit managers. And they are driving up drug costs for millions of people, employers and the government.

The three largest pharmacy benefit managers, or P.B.M.s, act as middlemen overseeing prescriptions for more than 200 million Americans. They are owned by huge health care conglomerates — CVS Health, Cigna and UnitedHealth Group — and are hired by employers and governments.

The job of the P.B.M.s is to reduce drug costs. Instead, they frequently do the opposite. They steer patients toward pricier drugs, charge steep markups on what would otherwise be inexpensive medicines and extract billions of dollars in hidden fees, a New York Times investigation found.

Most Americans get their health insurance through a government program like Medicare or through an employer, which pay for two different types of insurance for each person. One type covers visits to doctors and hospitals, and it is handled by an insurance company. The other pays for prescriptions. That is overseen by a P.B.M.

Biggest P.B.M.s Dominate

Each P.B.M.’s estimated share of prescriptions filled in the United States.

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A portrait of a man in a suit and bow tie standing in a yard, with text of a quote laid over the image: “It’s just nuts.’

“It’s just

nuts.”

Joseph Kaplan

“It’s just

nuts.”

Joseph Kaplan

A Modern Health Care Conglomerate

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A graphic showing the parts of CVS Health, a healthcare conglomerate. They are: a pharmacy benefits manager, a drugstore, an insurer, a mail-order pharmacy, a group purchasing organization and a drug production partner.

P.B.M.

CVS Caremark

Drugstores

CVS Pharmacy

CVS Health

Insurer

Aetna

Mail-order pharmacy

CVS Specialty

Group purchasing

organization

Zinc

Drug marketing

partner

Cordavis

P.B.M.

CVS Caremark

Drugstores

CVS Pharmacy

CVS Health

Insurer

Aetna

Mail-order pharmacy

CVS Specialty

Group purchasing organization

Zinc

Drug marketing partner

Cordavis

Fees Paid by Drug Manufacturers Doubled

What drug manufacturers paid in fees to P.B.M.s or their associated G.P.O.s.

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A graphic showing that the amount of fees collected by P.B.M.s rose from $3.8 billion in 2018 to $7.6 billion in 2022.

$7.6

$6.7

$5.5

$4.8

$3.8

billion

2018

2019

2020

2021

2022

2018

$3.8 billion

2019

$4.8

2020

$5.5

2021

$6.7

2022

$7.6

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A portrait of a man in glasses and wearing a polo short on a balcony, with a quote in text laid over him that says, “We were getting ripped off.”

“We were

getting

ripped off.”

Kent McKinley

“We were

getting

ripped off.”

Kent McKinley

Overcharging for a Cancer Drug

CVS Caremark charged Oklahoma far more than the wholesale cost for everolimus.

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A graphic showing the difference between the price charged by a P.B.M. to one client, $138,000, vs. the wholesale cost found by a local pharmacist, $14,000.

Price charged by

CVS Caremark

$138,000 per year

Wholesale cost for

a local pharmacist

$14,000

Price charged by

CVS Caremark

$138,000 per year

Wholesale cost for

a local pharmacist

$14,000

P.B.M.s Charge Inflated Prices

Two P.B.M.s charged two different clients much more than the wholesale cost of abiraterone acetate, a cancer drug.

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A graphic showing the difference between the price of the same drug charged by two different P.B.M.s to two different clients and its estimated wholesale cost.

What CVS Caremark

charged Blue Shield

$3,000 per month

What Express Scripts

charged Hyatt

$1,500

Price available

from a wholesaler

$160

What CVS Caremark

charged Blue Shield

$3,000 per month

What Express Scripts

charged Hyatt

$1,500

Price available

from a wholesaler

$160

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Featured

How PBMs Are Driving Up Prescription Drug Costs

ByJohn Rosenberg

Biggest P.B.M.s Dominate

A Modern Health Care Conglomerate

Fees Paid by Drug Manufacturers Doubled

Overcharging for a Cancer Drug

P.B.M.s Charge Inflated Prices

By John Rosenberg

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