Head-on Clash Between Pharmaceutical Firms and Pharmacy Benefit Managers Heats Up in Washington

A renewed battle is unfolding in Washington, D.C., between pharmaceutical companies and pharmacy benefit managers (PBMs) as President Donald Trump's administration transitions.

Drug Industry's Plea for Patient-First Approach

PhRMA, the pharmaceutical industry's primary lobbying organization, released its 2025 policy agenda. Key priorities include advocating for patient prioritization over PBM profits by sharing negotiated savings directly with patients and demanding accountability from PBMs and health plans for limiting patient choice.

PBMs Defend Value in Healthcare Ecosystem

PBMs such as CVS Caremark (CVS) are vehemently defending their role in the healthcare landscape. They emphasize their effectiveness in reducing prescription drug costs for branded medications. However, this defense comes amidst heightened scrutiny of PBM operations and their rebate strategy of negotiating discounts for ensuring patient access to specific drugs.

Scrutiny of PBM Role

An article published in the American Journal of Managed Care raises concerns that higher rebates correlate with increased list prices and higher out-of-pocket expenses for patients. This has prompted lawmakers to probe PBMs' actions, including their alleged preference for high-list price drugs with higher rebates over cost-effective alternatives.

PBMs Focus on Generic Options

CVS Health's Prem Shah maintains that PBMs strive to drive down costs of branded drugs. He highlights their role in promoting generic drug use, which can significantly reduce expenses compared to branded options. According to Shah, PBMs are responsible for lowering generic drug costs for their clients and fostering savings.

Emergence of Alternative Drug Access Models

Walmart has been a pioneer in offering low-cost prescription access, with its $4 generic drug program established in 2006. Competitive options have emerged, such as GoodRx coupons, Mark Cuban's Cost Plus Drugs, and CVS's own CostVantage service. These models have gained popularity as alternatives to traditional PBM channels.

Continued Role for PBMs Despite Competition

Shah acknowledges the rise of new drug access models, but remains confident in the ongoing need for PBMs in the healthcare system. PBMs remain a vital part of the equation for health insurance companies, as evidenced by CVS's PBM segment generating $178 billion in revenue in 2024.