The Corporate World - Written by Beasley Allen on Thursday, February 9, 2012 7:41 - 0 Comments
We hear the term Pharmacy Benefit Managers (PBM) from time to time and read on occasions about some of their activities. But I wonder how many folks really know what PBMs are and what they actively do. My guess is that most folks don’t have a clue. For the uninformed, PBMs administer almost every prescription drug insurance plan in the U.S. The first PBMs were created in the 1980s, and in recent years, they have taken on great importance.
The three largest PBMs managed drug benefits for over 200 million Americans, representing 95% of folks in this country with prescription drug coverage. Up until recently, the PBM industry was dominated by there three large companies, Medco, Caremark and Express Scripts. Together they administered 80% of insured prescriptions and 90% of insured mail order prescriptions. Each of these companies had annual revenues of over $15 billion. But now because of a recent transaction, there are two main players. Express Scripts bought Medco Health Solutions in December of last year for $29.1 billion, further increasing the power and influence of PBMs.
The PBMs are now working hard to increase their size and negotiating power. The PBMs process prescriptions for the groups that pay for drugs, usually insurance companies or corporations, and use their size to negotiate with drug makers and pharmacies. This latest deal continues the consolidation trend. It also illustrates how the industry is becoming more than just an administrator and negotiator. For example, it should be noted that the PBMs operate extensive mail-order pharmacies. That has the potential to drive out local competition and that’s very dangerous for persons buying prescription drugs. Once they control the market, the cost of those prescription drugs will go up sharply and consumers will again be the loser.
There is another area of abuse concerning the PBMs. They increase their profits by retaining payments from drug companies to promote their drugs. The PBMs are allowed under the existing law to accept rebates from the drug companies and that has been a tremendous money-maker for them. The goal of the drug companies is to increase sales of their most profitable products, which plays into the heads of the PBMs. This allows the PBMs to rake in tremendous profits through this rebate system. It’s most significant that the PBMs don’t pass these huge profits on to the insurance plans or to consumers. The bottom line is that the rebate system has developed into a great thing for the drug companies as well as for the PBMs. It also has a huge potential for abuse. Congress must take a serious look at how the PBMs operate and then take the actions necessary to protect the American people.
Leave a Reply
- An Update on the Firm's Mass Torts Litigation
- Eight Car Makers Join in the Recall of Exploding Airbags
- The Deepwater Horizon Claims Program is Up and Running Again
- Favorite Bible Verses
- J&J Pays Oregon $4 Million To Settle Hip Implant Marketing Claims
- MF Global Officers’ Defense Cost Already At $48 Million
- GSK Fined Record $489 Million For Bribery In China
- Bank Of America’s Mortgage Backed Securities Settlement Is The Most Consumer Friendly Deal Struck Thus Far
- Alabama Supreme Court Affirms Class-Action Status For $3.2 Billion Investor Lawsuit Against CVS Caremark
- U.S. Senate Confirms Jill Pryor To 11th Circuit
- Alabama Campaigns Move Slowly Towards November
- The National Scene Begins To Generate Interest
- United Kingdom’s Government Backs BP
- U.S. Chamber Sides With Foreign Oil Company Over Its Own Members
- Halliburton Reaches Settlement On Claims
- A Confirmation Of Judge Barbier’s Ruling That BP Was Grossly Negligent
- I bought my f350 from our local ford 2 years ago it had 140000 on it in the firs...
- I have worked for dollar general for 14 1/2 years. sept 29th me and my whole cre...
- I had the same ignition problem where the car would not turn off on my 2007 HHR ...
- my recall was just preformed and power steering has gone out. are these two issu...
- I would like to know if I have A case that your firm would take on. I had severe...
- If possible, I would love to join the class action law suit.
We own a 2004 F 35...
- I am wondering about this lawsuit. What the outcome is....
- You can find more information about Lipitor and its connection to Type 2 diabete...
Recent Settlements - Feb 9, 2012 7:09 - 0 Comments
More In Recent Settlements
- A Further Update On The AWP Litigation
- Firm Reaches Settlement In Fort McClellan Radio Tower Collapse Case
- Firm Reaches Settlement In Sikorsky Helicopter Crash
- The Philadelphia Story
- St. Croix, Virgin Islands Settlement
Product Liability - Oct 2, 2014 13:14 - 0 Comments
More In Product Liability
- NHTSA Looking Into Ford Fiesta Door Latch Problems
- NHTSA Looks At Chrysler Minivan Stalling Issue
- NHTSA Puts Blame on GM For Hiding Ignition Switch Defect
- Aurora Shooting Victims Sue Ammunition E-Retailers
- Children’s Clothing Should Never Be Fire Traps
Recalls Update - Oct 2, 2014 9:39 - 0 Comments
More In Recalls Update
- FDA Tells Compounder To Recall Contaminated Goods Again
- More Than 200,000 Pairs Of Children’s Sunglasses Recalled
- Cabrinha Recalls Kiteboarding Control System Due To Risk Of Injury
- iDevices Recalls Temperature Probes Due To Ingestion Hazard
- AmTRAN Video Recalls To Repair 42-Inch JVC Flat Panel Televisions