Pharma, PBMs Battle Escalates Amid Scrutiny and Increased Competition
Amidst shifting healthcare dynamics and the formation of President Donald Trump's new administration, a heated battle is brewing between pharmaceutical companies and pharmacy benefit managers (PBMs) in Washington, D.C. The industry's leading lobbying group, PhRMA, has outlined its policy priorities for 2025, advocating for policies that prioritize patients over PBM profits and hold PBMs accountable for limiting drug accessibility.
In response, PBMs such as CVS Caremark have asserted their value within the healthcare system. However, this defense follows increased bipartisan scrutiny of PBM practices, particularly concerning their rebate strategy and its impact on drug affordability.
Studies have linked higher rebates to inflated list prices and increased out-of-pocket expenses for patients. Consequently, policymakers have intensified their examination of PBMs, investigating whether they prioritize high-cost drugs with substantial rebates over more affordable alternatives.
Amidst this scrutiny, CVS Health Group President Prem Shah emphasized the role of PBMs in reducing branded drug costs. However, pharmaceutical companies have recently increased drug list prices by 4.5% compared to the previous year.
Despite PBMs' efforts to promote generic medications, which are typically less expensive than branded alternatives, companies like Walmart and online platforms such as GoodRx and Mark Cuban's Cost Plus Drugs have emerged as affordable alternatives. CVS itself has launched a similar service, CostVantage, to address this evolving market.
Additionally, telehealth companies are partnering directly with drug manufacturers, providing low-cost drug access. Shah maintains that health insurance companies will continue to require PBM services. In 2024, PBMs accounted for CVS's largest revenue segment, generating $178 billion.