Pharmaceutical Battle Heats Up: PBMs Defend Their Value Amid Scrutiny

Washington, D.C., USA - A renewed battle between pharmaceutical companies and pharmacy benefit managers (PBMs) is escalating in Washington, D.C., as the Trump administration takes shape.

PhRMA's Priorities

PhRMA, the drug industry's largest lobbying firm, has outlined policy priorities for 2025, including prioritizing patients by sharing savings with them and holding PBMs accountable for limiting patient choices.

PBM Defense

CVS Caremark (CVS) has defended PBMs' value in healthcare, emphasizing their efforts to reduce branded drug costs. However, their defense comes amidst bipartisan scrutiny of PBM operations and their discount strategy of negotiating rebates from list prices.

Research and Criticism

Research suggests that higher rebates lead to higher out-of-pocket costs for patients, raising concerns about the equity of this approach. Policymakers are investigating whether PBMs prefer drugs with high rebates over lower-net-cost options.

PBMs' Role in Cost Reduction

CVS Health president Prem Shah emphasizes that PBMs work to lower branded drug costs, and that their role in the supply chain is critical. He highlights their efforts in promoting generic drugs, which significantly reduce costs for patients.

Trump's Impact

Shah credits Trump's 2018 law that allowed pharmacists to inform patients about lower-cost options as a positive step. Prior contracts had restricted patients from accessing these options.

Alternative Models and Partnerships

Walmart, GoodRx, and Mark Cuban's Cost Plus Drugs offer alternative, low-cost prescription access. CVS launched its own similar service, CostVantage, to reduce the need for higher rates on some medications.

Additionally, telehealth companies are partnering with drug companies, and online platforms like Hims & Hers offer low-cost drugs.

PBMs' Continued Importance

Despite these new efforts, Shah maintains that health insurance companies will continue to need PBMs. In 2024, CVS's PBM segment accounted for the largest portion of revenue ($178 billion).