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College of Pharmacy

HelixTalk Episode #137 - It’s Time for PBM Reform: How PBMs Have Hurt Pharmacies and Increased Drug Costs

Date posted: October 5, 2021, 6:00 am

In this episode, we reveal what goes on behind the scenes for drug pricing and pharmacy reimbursement with Dr. Benjamin Jolley. Our discussion covers important concepts like PBMs, DIR fees, MAC pricing, and even possible upcoming changes at the federal government.

Key Concepts

  1. Prescription drug reimbursement is a major factor in the decline of independent pharmacies nationwide.  Complex reimbursement models, fees, and drug pricing structures are frequently not well understood by both patients and many healthcare providers.
  2. A pharmacy benefits manager (PBM) is a company hired by an insurance company to handle prescription drug coverage and reimbursement.  Three PBMs control more than three-quarters of the entire US market and can often dictate the terms of a drug reimbursement contract with pharmacies.
  3. PBMs determine how much they will pay for the cost of a medication using either a benchmark (such as the average wholesale price minus some percentage) or a list of the maximum allowable cost (MAC) maintained by the PBM.  Pharmacies are required to accept the PBM’s reimbursement amount regardless of the cost the pharmacy paid to acquire the drug from a wholesaler.
  4. DIR fees, clawbacks, and PBM rebate or discount agreements with manufacturers have resulted in lower reimbursements to pharmacies, higher drug prices for patients, and increased profits for PBMs.

References