Comprehensive Analysis Of PBMs From Prominent Economists Confirm Value of PBMs, Dispel FTC Findings

An important new economic analysis contradicts the findings of a recent Federal Trade Commission (FTC) interim staff report.

Dennis W. Carlton, Ph.D., David McDaniel Keller Professor of Economics Emeritus at the University of Chicago Booth School of Business, one of the leading industrial organization economists in the country, and former chief economist at the U.S. Department of Justice (DOJ) Antitrust Division, and a team of economists at Compass Lexecon released a new economic analysis on the role of pharmacy benefit managers (PBMs).

The analysis is one of the most comprehensive analyses of PBMs' role in drug pricing to date, looking into roughly 20 billion, 30-day equivalent prescriptions and representing more than a trillion dollars in drug expenditures.

View the Full Report.

Key findings from Dr. Carlton's report:

Rebates

According to the data, the manufacturer rebates-passed through by PBMs or distributed by PBMs as discounts-along with fees, are not the driver of increased drug costs.

• The data showed that PBMs are passing through the majority of manufacturer rebates and fees-recently, well over 95% of rebates and fees received from manufacturers are passed through, and in 2020 and 2021, this number has neared 100%.
• There is no basis, according to the research, for the claim that the growth in list prices is higher for rebated drugs than for non-rebated drugs. Between 2018 and 2022, the average wholesale price (adjusted in real terms for inflation) on rebated branded drugs increased by 2% while it increased by 3% on non-rebated branded drugs during this time.

Independent Pharmacies

According to the data, PBMs are not driving independent pharmacies out of business.

• Data from the National Council of Prescription Drug Programs show that there are more than 20,000 independent pharmacies, with the number of independent pharmacy locations increasing by 9.3% between 2011 and 2021. By contrast, the number of chain pharmacy locations decreased by more than 5% during this same period.
• Independent pharmacies are paid a higher reimbursement rate than unaffiliated chain pharmacies. Additionally, the number of independent pharmacies has increased, and both their margins and the share of prescriptions dispensed by non-affiliated retail pharmacies have remained stable.

Dr. Carlton said on the report: "Our year-long, comprehensive research-reviewing data on billions of prescriptions, including what was provided to the FTC-shows that PBMs distribute the vast majority of rebates to plan sponsors and should not be characterized as being 'responsible' for high drug costs … Many of the broad-brush claims against the PBM industry-including those of the FTC-are not based on systematic analysis of the evidence. Our findings-rooted in systematic, economic analysis of proprietary PBM data as well as third-party information-raise concerns about regulatory and legislative policies that seek to address high drug prices without drawing from a comprehensive, evidence-based analysis."

###

PCMA is the national association representing America's pharmacy benefit companies. Pharmacy benefit companies are working every day to secure savings, enable better health outcomes, and support access to quality prescription drug coverage for more than 275 million patients.

Public link

Please use the above public link if you want to share this noodl on another website.