Pharmaceutical Industry and PBMs Clash Over Patient Costs
Washington, D.C. - As the new Biden administration takes shape, a brewing battle between pharmaceutical companies and pharmacy benefit managers (PBMs) has emerged in Washington.
Industry Lobbying
PhRMA, the largest lobbying group for the drug industry, recently released its policy priorities for 2025, emphasizing the need to prioritize patients over PBM profits. PBMs, in turn, have defended their value in healthcare cost management.
PBM Scrutiny
However, PBMs have faced bipartisan scrutiny over their rebate strategy, raising concerns about potential cost savings. According to an article in the American Journal of Managed Care, higher rebates may result in inflated list prices and out-of-pocket costs for patients.
PBM Defense
CVS Caremark's group president and executive vice president, Prem Shah, has highlighted PBMs' role in lowering branded drug costs. He emphasizes their efforts to promote generic drugs, which typically cost less.
New Competition
PBMs are also facing competition from new models such as Walmart's $4 generic program, GoodRx coupons, and Mark Cuban's Cost Plus Drugs. CVS has launched a similar service, CostVantage, to reduce price discrepancies.
Telehealth Partnerships
Telehealth companies, such as Eli Lilly and Pfizer, are also partnering directly with drug companies to provide more affordable drug options. Online platforms like Hims & Hers and Amazon Pharmacy are offering low-cost drugs as well.
PBM Value
Despite these new entrants, Shah maintains that PBMs remain essential for health insurance companies. In 2024, PBM services accounted for the largest segment of revenue for CVS.
Impact on Healthcare
The ongoing conflict between pharmaceutical companies and PBMs is likely to have significant impacts on patient costs, industry regulation, and overall healthcare spending. Stay tuned for updates on this evolving battle.