Escalating Tensions Between Pharma Companies and PBMs in Washington
As President Trump's new administration takes shape, a battle is brewing in Washington, D.C., between pharmaceutical companies and pharmacy benefit managers (PBMs).
Industry Lobbying Efforts
PhRMA, the drug industry's largest lobbying firm, has released its policy priorities for 2025, advocating for putting patients before PBM profits by sharing negotiated savings directly with patients and holding PBMs accountable for limiting patient choices.
PBM Defenses
PBMs such as CVS Caremark (CVS) have defended their role in healthcare, arguing that they lower the costs of branded drugs. They point to their efforts in promoting generic drugs, which account for over 90% of prescriptions in the US and save clients money.
Scrutiny of PBM Practices
However, PBMs are facing increased scrutiny from both parties regarding their rebate strategy and its impact on overall drug costs. Some research suggests that higher rebates have led to higher list prices and increased out-of-pocket expenses for patients.
Alternative Models Emerge
New market entrants like Walmart, GoodRx, and Cost Plus Drugs are offering low-cost prescription access, challenging traditional PBM models. CVS itself has launched a similar service called CostVantage.
Telehealth and Direct Partnerships
Telehealth companies and drug manufacturers are forming direct partnerships, offering access to discounted medications. Online platforms like Hims & Hers and Amazon Pharmacy are also providing low-cost drug options.
PBMs' Future Role
Despite these new efforts, PBMs remain essential intermediaries in the healthcare system, handling prescription management for many health insurance companies. CVS's PBM business generated $178 billion in revenue in 2024, demonstrating its continued significance.