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Criticism of PBMs Debunked in New Study

CAPD

For too many Americans, Big Pharma has made prescription drugs expensive or outright unaffordable. But for the last two years, those same big drug companies have pushed many in Washington, D.C. to instead point the finger at pharmacy benefit managers (PBMs) – most recently, the Federal Trade Commission (FTC). In July, the FTC published its interim report on PBMs, which drug pricing experts have already characterized as “unbalanced and unempirical” and “evidence-free.” Now, new data continue to refute the FTC’s conclusions.

A new study by Compass Lexecon, which uses data provided by Professor Dennis Carlton, former chief economist at the DOJ Antitrust Division and Professor of Economics Emeritus at the University of Chicago, Booth School of Business, shows that the data simply doesn’t support the claims made by some of PBMs harshest critics, including the FTC. While critics focus narrowly on a small sample of drugs to claim that PBMs boost drug costs, the study took a look at the big picture.

The FTC’s interim report criticized PBMs for encouraging patients to pick up a prescription at an affiliated pharmacy, claiming that this inflates drug costs. But when researchers looked at the data on the how much plan sponsors and their members paid for drugs, they found that payments for drugs at these affiliated pharmacies resulted in lower costs for patients than for the same drugs at non-affiliated pharmacies.

The FTC’s interim report relies on quotes and anecdotes from public reporting. But it cites little quantitative analysis or economic evidence to support its claims.  This omission becomes even harder to reconcile considering that the data from Dr. Carlton in the Compass Lexecon report is the same information provided to the FTC.

Other claims from the FTC’s report that independent pharmacies are being driven out of business by PBMs are also way off the mark. According to industry data, between 2011 and 2021 the number of independent pharmacy locations increased even as the overall number of pharmacy locations nationwide decreased. What’s more, the report underlines that PBMs have no economic incentive to reduce the viability of efficient independent pharmacies because they rely on those pharmacies to build networks.

The study is another piece of quantitative evidence showing conclusively that PBMs play an important role in enabling plan sponsors to reduce drug costs.

Rep. Eric Burlison (R-MO) also highlighted the inconsistencies in the common attacks on PBMs in a recent House Oversight Committee hearing. Burlison pointed to the choices employers, unions and plan sponsors have when it comes to picking their PBM to lower health care costs: “If [customers are] not happy, if the price is too high, just like in the normal market, they can choose someone else. There are apparently 70 different options.” And research shows that employers place enormous value on having the option to choose the type of coverage that meets the unique needs of their employees.   
 

There’s no denying that patients are struggling with high prescription drug prices. However, the data shows that PBMs are lowering drug costs for the customers they serve – including insurance plans, employers of all sizes, labor unions, and government programs – by creating and encouraging robust competition in the market and providing choice to clients to meet the unique needs of their employees and members.