Posts Tagged pharmaceutical industry

Pharmacy benefit managers: a mechanism for containing costs or a contributor to rising drug prices?

While pharmaceutical companies are often the focus of conversations about high drug prices, more recently pharmacy benefit managers (PBMs) have come under increased drug price scrutiny. The American PBM business model, developed in the early 2000s, was designed to identify treatment-eligible patients, reduce health insurer administrative burden, and price negotiate with the pharmaceutical manufacturer. By managing these prescription drug programs on behalf of health plans, PBMs exert wide-reaching influence on drug formularies and rebate negotiations with manufacturers.

A PBM’s revenue comes from upfront and secretly negotiated discounts and rebates following sales for including the pharma company’s medications on their formulary (a powerful leverage for negotiating prices), as well as through charging health plans a higher amount than they reimburse pharmacies. The latter practice is called “pharmacy spread”.

The Pharmaceutical Care Management Association (PCMA), the national trade association representing America’s pharmacy benefit managers, claims that PBMs reduce prescription drug costs for consumers, employers and government programs.1 However, the National Academy for State Health Policy (an independent academy of state health policymakers)  summarizes concerns around the PBM business model, highlighting anti-consumer practices including2:

  • Drug formularies that may benefit PBMs but not patients;
  • Gag clauses that restrict pricing information pharmacists can share with consumers;
  • Restrictions on drugs purchases to PBM-controlled pharmacies; and,
  • Lack of fiduciary transparency in operations.

Are PBMs contributing to high drug prices?

One key question is whether PBMs actually help contain costs for insurers and consumers. Theoretically, their pricing power should benefit insurers, which then pass on savings to their customers through better benefits and lower premiums. In actuality, only a portion of the rebate is passed onto insurers, so the impact at the health plan (and consumer) is diluted.

Moreover, the Medicare Payment Advisory Commission raised concerns that PBMs are not choosing the lowest-cost drugs.3 Since the rebate received by the PBM is based on the drug price, the higher the price of the drug then the higher the rebate. This business model results in conflicts of interest because rebates have the potential to shift incentives towards drugs with the highest rebate rather than the most cost-effective price. DHHS Secretary Alex Azar went further to suggest that PBMs prevent pharmaceutical companies from lowering list prices in order to secure a higher rebate by threatening to remove drugs from their formulary.4

PBMs pushed back, with the PCMA releasing a report that lays the blame for high prices on drug makers, asserting that list prices are rising even when there are no rebates to PBMs.5

The Ohio Department of Medicaid criticized PBMs after an audit found they used the practice of “pharmacy spread” to collect over $208 million from generic prescriptions during a single year by charging Medicaid more than pharmacies were being reimbursed.6 CVS Health and its PBM, CVS Caremark, hit back, claiming that PBMs have saved Ohio taxpayers $145 million annually.7

If PBMs do lower costs, are these savings being passed on to patients? Dan Leonard, President & CEO of the National Pharmaceutical Council (a health policy research organization representing American biopharmaceutical companies), pointed out that while PBMs have been able to keep commercial plan drug spending slow, out-of-pocket spending by consumers was at the highest level in a decade in 2016.8 This suggests that even if PBMs are saving money for insurers, these savings are not being passed on to patients.

Lack of transparency has also been a key point of contention with PBMs. In a September 14, 2017 Health Affairs brief, Cole Werble of the health care policy firm Prevision Policy, LLC called PBM price negotiations, “…opaque by design,” suggesting that PBM leaders believe that full transparency around rebates could prevent future discounts. 9This black box surrounding rebates and net pricing makes it difficult to know what role PBMs have in increasing drug prices and whether they are passing on rebates to consumers and insurers.

The landscape is moving towards increased regulation of PBMs

How is the healthcare ecosystem reacting to criticism of PBMs?

At the federal level, the Senate recently voted to ban ‘gag clauses’, a practice where PBMs prevent pharmacists from telling customers when prescriptions would cost less if purchased outside their plan.10 State legislatures are also pushing for more transparency and fewer anti-consumer practices, with over 80 PBM bills introduced into state legislatures to address concerns ranging from gag clauses to making rebate amounts publicly available. The National Academy for State Health Policy has drawn together these bills to create a model for PBM legislation.2 After its audit controversy, Ohio plans to ban spread pricing, only allowing PBMs to charge small administrative and dispensing fees while requiring rebates to be passed back to the state.11

Some PBMs are responding to criticism with increased cost control measures. CVS Caremark announced in August that it would allow self-funded insurers to exclude any drug launched at a price greater than $100,000 per QALY with the reasoning that this would push pharmaceutical companies to lower launch prices.12

How federal and state legislation will evolve remains to be seen. However, mandating increased transparency promises to clarify the role of PBMs in rising drug prices, making it easier to address any anti-consumer practices. With the pressure to contain costs rising, scrutiny towards all players in healthcare will only increase.

Let us know what you think by commenting on the blog. To stay up on news related to pharma pricing and healthcare value around the globe, subscribe to the HealthEconomics.Com weekly newsletters.

  1. PCMA. Our Mission. (2018). Available at:
  2. 2.  Horvath, J. Pharmacy Benefit Manager Model Legislation: Questions and Answers. (2018). Available at:
  3. MedPAC. Factors increasing Part D spending for catastrophic benefits. MedPAC Blog (2017). Available at:
  4. Sweeney, E. Senators press PBMs to clarify Azar’s ‘extremely disturbing’’ drug pricing allegations’. Fierce Healthcare (2018). Available at:
  5. PCMA. Reconsidering Drug Prices, Rebates, and PBMs. (2018). Available at:
  6. Ohio Auditor of State. Auditor’s Report: Pharmacy Benefit Managers Take Fees of 31% on Generic Drugs Worth $208M in One-Year Period. (2018). Available at:
  7. CVS Health. CVS Health Statement on Ohio Auditor of the State’s Report on Pharmacy Benefit Managers. (2018). Available at:
  8. Leonard, D. PBM rebates’ impact at the Rx counter. Chain Drug Review (2018). Available at:
  9. Werble, C. Pharmacy Benefit Managers. Health Affairs (2017). Available at:
  10. Firozi, P. The Health 202: Senate passage of ‘gag clause’ ban is just a tiny step to lowering drug prices. Washington Post (2018). Available at:
  11. Inserro, A. Ohio Tells Medicaid PBMs That 2019 Will Be a Time for Transparent Contracts. (2018). Available at:
  12. CVS. Current and New Approaches to Making Drugs More Affordable. (2018). Available at:

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Top 5 Signs You Are Ready for an Online Master’s Degree in 21st Century Healthcare

Taking that step to enroll in a Master’s degree program could result in a promotion, open doors to a new career, and help you achieve a dream. It can even transform your life.

But, deciding to go back to school can be confusing, daunting, and expensive.

What if you could realize your graduate school dream, keep working, continue living where you are, and not break the bank?

The top-10 ranked University of Florida’s Online Graduate Program in Pharmaceutical Outcomes & Policy offers professionals a way to pursue MS, MS+MBA, or Graduate Certificate degrees in one of 4 Specialty Areas, all while continuing to work full-time in their job! 

Is this the type of graduate program for you? Let’s explore.

Here are the top 5 signs you are ready for a Master’s Degree to advance your career into 21st Century healthcare.


1. You want more advancement potential in your job.

Are you in a job that is starting to feel routine, or you believe you have more to offer but can’t? Do the positions you aspire to require additional degrees or specialization? No matter how hard you work, unless you have the right credentials, these new opportunities may continue to be out of reach…unless you get a specific graduate degree that gives you marketable skills.

A graduate degree that focuses on a the areas most in demand in healthcare (health outcomes, analytics, patient safety, managed care, pharmaceutical regulation) is virtually required in today’s changing healthcare environment; and a degree from a top 10 University taught by world-renowned professors may be just the right antidote for your current employment “failure to thrive”.

2. You know what you want to study.

Simply going to graduate school – any graduate school –  is not the best solution if it’s just a way of treading water or delaying a decision. Pursuing a master’s degree, a MS+MBA, or even a graduate certificate, is a big decision and a commitment.

If you know the area you want to specialize in and it’s related to the vastly growing field of healthcare outcomes and policy – and specifically, Applied PharmacoEconomics, Managed Care Systems, Patient Safety in Medication Use, or Pharmaceutical Regulation – then the University of Florida’s Online Graduate Program in Pharmaceutical Outcomes & Policy may be the perfect fit for you.

This flexible graduate program blends applied, real-world learning and is taught by professors with rigorous academics and in-the-trenches knowledge. Your fellow students are working professionals who bring their life experiences and business savvy to the classroom, creating a melting pot of learning that gives you tools to apply to your job on the very first day of class.

3. You miss working on real-life problems that can change healthcare.

Do you want to work in a job that helps make things better in our world and gives you satisfaction at the end of the day? Do you crave working on projects that solve real problems?

Then pursuing a graduate degree from a world-renowned research institution like University of Florida, within the Top-10 ranked School of Pharmacy, is a perfect fit. Fellow students come from a vast array of global companies, including health systems, hospitals, law firms, biotechnology, data analytics, and artificial intelligence. You are in a virtual classroom with seasoned business executives, entrepreneurs, healthcare providers, and individuals just beginning their careers. Diversity, innovation, real-life problem-solving – all this awaits you.


4. You need a flexible graduate program that allows you to keep working and/or balance your family demands.

Many of us want to pursue a graduate degree, but it’s impractical to quit our job and become a full-time student. Many of us having families, children, community and volunteer responsibilities. You wonder, “can I manage it all?”.

At the University of Florida, we understand this, and the Online Graduate Program in Pharmaceutical Outcomes & Policy allows you to pursue an MS, MS+MBA, or Graduate Certificate while you stay employed full-time, or manage your family life. We have more than 400 alumni success stories who have balanced their academic commitments with family life. The UF Online Pharmaceutical Outcomes & Policy Graduate Program provides flexibility in so many ways:

  • Start anytime during the year
  • Complete in <5 semesters, or take time off for life/professional events and take up to 7 years!
  • Applied, practical, real-world model education
  • GRE waived/delayed for most students
  • No thesis

Priced less than most competitor programs with a substantial discounts offered for Academy of Managed Care Pharmacy members, the UF POP program is fully accredited and recognized worldwide for educational rigor and quality.


“The course load, timing of exams, and amount of assignments worked well with my other responsibilities and it wasn’t too burdensome. This was really important.”

~Former graduate student, now Manager, GHEOR at Xcenda


5. You’ve looked at online graduate programs, but they all seem the same, are too niche, or it seems hard to learn “alone on your computer.”

The UF Pharmaceutical Outcomes & Policy program is different than most online graduate programs. Open to anyone with a B.S. (or higher) degree, students in UF’s program come from all walks of life, many with diverse and varied experience. And you do NOT have to have a healthcare background! Up to 25% of students come from non-healthcare backgrounds, and recognize the importance of applied skills in healthcare systems, one of the greatest growth areas of the future! No prior healthcare experience required!


Choose from MS, MS+MBA, or Graduate Certificate Program.
And focus on your area of interest, with 4 Specialty Tracks:


 “I got a great foundation across many areas of healthcare, including policy, ethics, epidemiology, data analytics, and economics. I learned things in my classes that immediately helped me in my job – even before graduating!”

~Former Graduate Student, now Director, Clinical Program Management at major PBM


Another way the UF POP graduate program is different is that it is online, but interactive with professors and students!

At UF’s Online Graduate Program in Pharmaceutical Outcomes and Policy, you won’t be stuck learning on your own with a dis-embodied voice and a PPT presentation! In an innovative, time-tested, and highly rated format called “Live Online Learning”, students in the online graduate program learn in a teacher-led once weekly class attended by you and all your fellow students. For about two hours on Sunday nights, you gather online to listen to a live lecture, ask questions, network, and problem-solve – together. So, you get the advantage of online learning, where you can “attend” class from anywhere (your home, in your PJs, or the airport while on a business trip). But, you also get the advantage of interactive learning as if you are in a classroom – albeit a “virtual classroom”.

Here’s what other students say about the Live Online Learning in the UF Online Pharmaceutical Outcomes & Policy Graduate Program:

“I had taken online classes before that had no live component to them, and you just play it back on-demand. I found it really hard if you have questions. You can’t raise your hand (like you can in our live online classes), and interaction with classmates was invaluable, particularly for me because I didn’t have a healthcare background.”

~JB, Managed Market Account Manager for a large pharmaceutical manufacturer.


“This program really met my needs for workload and offered important flexibility when I started a new job. I was able to take a semester off to move and get into my new position, then restart the program.”

~DG, PharmD, MS, MBA, Director at a major healthcare insurance company


Not quite ready to commit? Then join us for an Informational Webinar, Wednesday, June 20th, 2018 from 6:00 to 7:00 pm EST.

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