Understanding Competition in U.S. Prescription Drug Markets: Entry and Supply Chain Dynamics
When PBMs first came around, they had a purpose. They processed claims between pharmacies and insurers. They branched into mail order pharmacy and directly competed without transparency with community pharmacy. They now direct what drugs are prescribe by they use of formularies. Too many times what is on their formulary is based on price concessions they receive from the drug manufacturer, not on what is best medical practice. This price concession or kickback goes to their mail order pharmacy bottom line or directly to the PBM's bottom line. They own nothing and control everything. They arbitrarily set Maximum Allowed Costs or MACs on drugs that have no basis or impossible to find. They will have one MAC list for the payor and only upon state laws passed have one list for pharmacies that they increasingly do not abide by. The PBM's practices are increasing healthcare costs to the patient and the payers (commercial and government). The discounts received due to their volume are being shared partially with the payers with the highest percent going to their bottom line. With no transparency, who knows how much they are really sharing. Why should any industry have a safe harbor for kickbacks? At a time when drug prices are soaring, and the public is at risk of harm from shortages of critical medications and sterile products, the FTC MUST investigate how the middlemen of GPO and PBM are causing these issues. Again, these "rebates" would be called kickbacks in any other industry.