The relationship between pharmacy benefit managers (PBMs) and the cost of therapies in the US pharmaceutical market: A policy primer for clinicians.

Published

Journal Article (Review)

Pharmaceutical benefit managers (PBMs) are playing an increasingly important role in establishing access to pharmaceutical products for patients. PBMs set retail prices for pharmaceutical products, negotiate "rebates" from manufacturers based on total sales volume of products, and achieve several types of postsale price concessions and payments from pharmacies. All of these activities describe a complex flow of funds that has not been transparent to clinicians or to patients. In this article, we describe these terms and processes to better understand how pharmaceutical products are financed in the United States. In 2016, US pharmaceutical manufacturers reported gross pharmaceutical sales of $462 billion and net pharmaceutical sales of $318 billion. The difference between gross and net sales is largely due to the different "payments" from manufacturers to PBMs and other intermediaries in the marketplace. We examine the flow of funds through the US pharmaceutical distribution system over time using data from the annual reports of 13 major pharmaceutical manufacturers for the period 2011-2016. Overall, we find that net revenues for our sample of firms grew by an average of 2.7% annually between 2011 and 2016, whereas rebates and other payments increased by 15% annually over the same period. Our examination of the pharmaceutical market reveals the enormous scale of payments from pharmaceutical manufacturers to intermediaries. We observed that these payments have been growing disproportionally to manufacturer net income over the past 5 years. We also found a lack of transparency regarding the flow of funds through intermediaries. This entire marketplace is now the subject of intense public debate.

Full Text

Cited Authors

  • Schulman, KA; Dabora, M

Published Date

  • December 2018

Published In

Volume / Issue

  • 206 /

Start / End Page

  • 113 - 122

PubMed ID

  • 30447542

Pubmed Central ID

  • 30447542

Electronic International Standard Serial Number (EISSN)

  • 1097-6744

International Standard Serial Number (ISSN)

  • 0002-8703

Digital Object Identifier (DOI)

  • 10.1016/j.ahj.2018.08.006

Language

  • eng