Exploring the Impact of PBMs on High Drug Prices

The US pays the highest amount per capita on prescription drugs than any other nation. Several factors interact to drive prices up in the nation. Since a major portion of pharmaceutical development occurs in the US, drugmakers argue high prices are necessary to offset research costs and promote exclusivity. In addition, pharmacy benefit managers (PBMs) play a large role in setting drug prices because they negotiate formularies and drug rebates.

According to Mallikarjun Chityala, “PBMs earn dividends from rebates after every product purchase. Therefore, instead of lowering drug costs, a PBM’s interest often lies in inflating drug prices to gain more significant rebates. This strategy has completely changed the focus of pharmaceutical companies; instead of competing for good quality, affordable medicines for patients, pharma companies are more interested in appeasing PBMs for the leading position on formularies by offering heavy incentives and pushing higher prices.”

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(Source: The Medicine Maker, May 11^th, 2023)