It’s the battle of the pharmacy benefit managers (PBMs).
If you need a refresher, PBMs are third-party companies that health insurance companies use to handle prescription drug benefits for their health plans.
But increasingly, instead of looking for a third party to handle these benefits, insurers are turning in-house and launching or acquiring their own PBMs. This keeps the revenue streams close to home and gives insurers more control over who gets what medication and when (rather than the prescribing physicians).
The majority of the PBM market is controlled by three major companies, all with connections to major insurers. These PBMs are CVS Caremark (owned by CVS, which also owns payor Aetna), OptumRx (owned by UnitedHealth Group) and Express Scripts (owned by Cigna).
According to a recent article in Modern Healthcare, these three companies control almost 80 percent of the PBM market.
But some of the young guns are trying to invade the market and make a name for themselves: Companies such as AffirmedRx, Liviniti, MedOne Pharmacy Benefit Solutions, Navitus Health Solutions, RxPreferred Benefits and SmithRx are all trying to get a piece of the PBM pie.
Their strategy is twofold, writes Modern Healthcare. One of their strategies is billing themselves as “more transparent” than the bigger PBMs. This is significant, because the existing PBM model is basically a black box. Though PBMs claim they minimize consumer cost, a lack of transparency and methods like clawbacks and spread pricing seem to drive the dollars from employers and consumers toward PBMs, instead of the other way around.
So, we get where the little guys are coming from — the new kids on the block are saying they can do things cheaper and more transparently.
The other strategy these new PBMs are employing is amping up lobbying for legislation. While all the major PBMs are members of one trade group, the smaller guys have launched their own.
Why does this matter?
Because of the current political conversations happening in Washington. Congress is increasingly pushing regulation on PBMs — legislation that the Pharmaceutical Care Management Association “vigorously opposes.” Meanwhile, the smaller PBMs support such regulation in hopes that it will rein in the competition.
The smaller coalition, Transparency-Rx, for its part, launched a digital advertising campaign that “promote[d] policies that would require PBMs to share negotiated drug rebates and discounts, limit spread pricing, and de-link PBM compensation from list prices.” These methods — we hope — should bring consumer prices down.
You could call us skeptical. While it’s great that these smaller guys are trying to improve price transparency and lower consumer costs, at the end of the day, do they want to just get in on the competition? Will these smaller players actually make the industry more transparent, or just slide in to take their part of the profits?
Because when money rules your motives, everyone but the consumer wins.
Just ask the bigger PBMs.
