Pharmacy Benefit Managers (PBMs); everybody loves to hate 'em. They are intrusive, complicated, and an unwelcome layer of bureaucracy. However most people credit them with being a necessary evil, a tool in the kit to try to hold medical costs down. And originally that was their purpose. However, this article http://prospect.org/article/hidden-monopolies-raise-drug-prices-0 discusses how they morphed into part of the problem, instead of part of the solution:
"If you have drug coverage as part of your health plan, you are likely
to carry a card with the name of a PBM on it. These middlemen manage
prescription drug benefits for health plans, contracting with drug
manufacturers and pharmacies in a multi-sided market. Over the past 30
years, PBMs have evolved from paper-pushers to significant controllers
of the drug pricing system, a black box understood by almost no one.
Lack of transparency, unjustifiable fees, and massive market
consolidations have made PBMs among the most profitable corporations
you’ve never heard about."
"Americans pay the highest health-care prices in the world, including the
highest for drugs, medical devices, and other health-care services and
products. Our fragmented system produces many opportunities for
excessive charges. But one lesser-known reason for those high prices is
the stranglehold that a few giant intermediaries have secured over
distribution. The antitrust laws are supposed to provide protection
against just this kind of concentrated economic power. But in one area
after another in today’s economy, federal antitrust authorities and the
courts have failed to intervene. In this case, PBMs are sucking money
out of the health-care system—and our wallets—with hardly any public
awareness of what they are doing."
"Even some Republicans criticize PBMs for pursuing profit at the public’s expense.... their desire for larger patient networks created
incentives for their own consolidation, promoting their market dominance
as a means to attract customers. Today’s “big three” PBMs—Express
Scripts, CVS Caremark, and OptumRx, a division of large insurer
UnitedHealth Group—control between 75 percent and 80 percent of the
market, which translates into 180 million prescription drug customers.
All three companies are listed in the top 22 of the Fortune 500, and as
of 2013, a JPMorgan analyst estimated total PBM revenues at more than
"Why haven’t PBMs fulfilled their promise as a cost inhibitor? The biggest reason experts cite is an information advantage in the complex pharmaceutical supply chain....Says David Balto, an antitrust litigator and former top official with
the Federal Trade Commission: “But these companies make a fabulous
amount of money, even though they’re not buying the drug, not producing
the drug, not putting themselves at risk.”'
This article is worth reading for a better understanding of one of the reasons why is so hard to get a handle on health care costs. There are vested interests which aim to keep it dark, deep, and complicated.