Pharmaceutical Battle Heats Up in Washington
A fierce battle is brewing in Washington, D.C., as pharmaceutical companies and pharmacy benefit managers (PBMs) clash over industry practices.
PhRMA's Policy Priorities
The Pharmaceutical Research and Manufacturers of America (PhRMA), the industry's largest lobbying firm, has released its policy priorities for 2025. Among them is a call to prioritize patients over PBM profits by sharing cost savings directly with patients and holding PBMs accountable for limiting patient choices.
PBM's Defense
PBMs like CVS Caremark (CVS) have defended their value in the healthcare system. CVS Health group president Prem Shah emphasized PBMs' efforts to lower brand-name drug costs, despite recent price increases by pharma companies.
Scrutiny of PBM Practices
Nonetheless, PBMs face bipartisan scrutiny over their operations and rebate strategy, which involves negotiating discounts from list prices to ensure patient access to certain drugs. Concerns have been raised about the impact of higher rebates on drug prices and patient out-of-pocket costs.
Alternative Models
Amid the pressure on PBMs, low-cost prescription access alternatives have emerged. Walmart, GoodRx, and Mark Cuban's Cost Plus Drugs have gained popularity. CVS itself has launched CostVantage, a similar service based on drug production costs plus markup.
Telehealth and Direct Partnerships
Pharmaceutical companies are also partnering directly with telehealth providers like Eli Lilly (LLY) and Pfizer (PFE). Online platforms like Hims & Hers (HIMS) and Amazon Pharmacy offer access to low-cost medications.
PBMs' Continued Role
Despite these advancements, Shah believes health insurance companies will still require PBMs. CVS's PBM business was its largest revenue segment in 2024, generating $178 billion.