Cancer Therapy Advisor detailed on March 16 how pharmacy benefit managers negotiate rebates and design formularies that influence drug costs and patient access. Pharmacy benefit managers, or PBMs, serve as intermediaries between insurance providers, pharmaceutical manufacturers, and pharmacies, according to Cancer Therapy Advisor.
PBMs negotiate rebates and pricing terms with drug makers, create and maintain drug formularies that determine coverage and copayment levels, and manage claims processing for prescriptions. The publication details how PBMs leverage their position to influence medication selection and patient costs through their formulary designs and rebate arrangements. This setup particularly affects individuals needing cancer treatments where access to specific therapies can vary significantly based on coverage decisions according to Cancer Therapy Advisor.
A study published by JAMA Health Forum indicated that PBM markets were highly concentrated in 2023 with many states showing elevated Herfindahl-Hirschman Index scores. For instance Hawaii recorded an HHI of 4273 while Illinois saw one major PBM handling over 70 percent of certain prescriptions. This situation allows dominant managers to strongly influence drug selection on formularies available to regional patients and plans. The result can include prioritization of higher-rebate medications over the lowest-cost options for people in those areas.
The Federal Trade Commission staff report found that the three largest PBMs processed nearly 80 percent of all prescriptions in the United States. These PBMs and their affiliated specialty pharmacies generated more than 7.3 billion dollars in revenue from markups on specialty generic drugs including cancer treatments. Patient and plan payments for these drugs rose over the period despite the intermediaries involvement. National market dynamics contributed to patients facing higher costs and fewer choices under their plans.
The three largest PBMs include OptumRx owned by UnitedHealth Group, CVS Caremark owned by CVS Health, and Express Scripts owned by Cigna. These firms manage benefits for the majority of Americans with prescription coverage through negotiation, formulary design, and claims processing. Their operations have drawn attention from policymakers seeking greater transparency in the drug supply chain. Industry analyses describe their role in handling hundreds of billions in drug expenditures each year according to KFF.
