ST. LOUIS — Growing federal scrutiny of pharmacy benefit managers is placing greater emphasis on transparency in rebates, fees and other compensation, while raising questions about whether the changes will ultimately reduce pharmacy costs for employers and patients.
This year, the Department of Labor proposed new disclosure requirements that would give fiduciaries of self-insured employer health plans more information about the direct and indirect compensation PBMs receive. The proposal covers payments from drug manufacturers, spread pricing, pharmacy payments, and other compensation, and would give plan fiduciaries audit rights.
The Federal Trade Commission has also intensified its scrutiny of the industry. In July, the agency reached a settlement with CVS Health’s Caremark Rx and Zinc Health Services that requires changes to rebates, PBM fees, transparency, and pharmacy reimbursement practices. The FTC said the settlement is designed, in part, to lower patients’ out-of-pocket prescription costs.
The regulatory push comes amid ongoing scrutiny of vertical integration in the PBM industry. An earlier FTC staff report found that the three largest PBMs and their affiliated specialty pharmacies generated more than $7.3 billion in dispensing revenue above estimated acquisition costs for the specialty generic drugs studied between 2017 and 2022.
SHARx, which provides prescription drug procurement services to employer-sponsored health plans, said the changes make it increasingly important for plan sponsors to evaluate the total economics of their pharmacy benefits rather than focusing solely on rebates.
“Changing one PBM revenue stream does not automatically translate into lower costs for employers,” said Paul Pruitt, chief growth officer and co-founder of SHARx. “The financial model can adjust, so plan sponsors need transparency across the entire arrangement to understand whether reform is producing real savings.”
Pruitt said employers should examine compensation paid to specialty pharmacies, group purchasing organizations, rebate aggregators and other affiliated businesses when evaluating PBM contracts.
“The question isn’t whether a PBM can show you a transparent contract,” Pruitt said. “The question is whether you can see the economics of the entire system you’re paying for.”
SHARx argues that the ultimate measure of PBM reform should be its impact on total net pharmacy spending and on patients’ access to medications, particularly high-cost and specialty drugs.
