PBMs Under Fire: What CVS's Response Leaves Out
- Healthcare
- Public Policy
Trump has taken aim at pharmacy benefit managers, and the response from the industry seems to be… duck and cover. Prem Shah, executive VP at CVS, responded to skepticism on #Bloomberg today.
Pharmacy benefit managers (PBMs) act as a middleman between purchasers of prescription medicine, like health insurers. They negotiate directly with drug manufacturers and maintain drug formularies (the list of medicines covered by insurance). Theoretically, they’re able to consolidate these services for a large number of purchasers and save money that way.
That’s certainly what Prem Shah says. He repeated the claim found on the industry website that PBMs are responsible for over $1000 in savings per person per year. [1]
But that is decidedly at odds with the recent FTC report on PBMs, which found that they marked up cancer and HIV-related drugs by thousands of percent, resulting in $7.3 billion in additional revenue for the “Big 3” (CVS, ESI, and OptumRx). A previous report found that the percentage of dispensing revenue for specialty drugs like these going to PBMs increased from 54% to 68% between 2016 and 2023. [2]
Shah says that he hopes he can have a dialogue with the Trump administration regarding the value that PBMs provide. Time will tell how successful his efforts will be.
What do you think? Should these middlemen continue to exist?