By Joe Grogan and Casey B. Mulligan
Washington is a town not known for bipartisan agreement. But its swarms of drug-company lobbyists appear to have united both parties in opposition to pharmacy benefit managers. PBMs are taking the blame for high drug prices.
PBMs manage prescription-drug benefits for payers like health insurers, plan sponsors and large employers. Their job is to keep costs down and manage patient care. Democrats don’t like this arrangement because they want the federal government to control prices. Republican anger is harder to understand. It may stem from a lack of understanding of the value PBMs provide. Plan sponsors work with PBMs, despite having no obligation to do so, because they can reduce a plan’s drug costs by half. These savings translate to lower health-insurance premiums and better drug utilization. When patients stay on their drugs and out of the hospital it saves patients and plans buckets of money. The net value of pharmacy benefit management exceeds $145 billion annually.
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