PBMs say they save money by negotiating down steep pharmaceutical prices. But the middlemen are often fingered as a driver of increasing healthcare spending and are facing increasing scrutiny for their practices from both legislators in Congress and regulators in the Federal Trade Commission.
The new report adds to a growing body of evidence showing that consumers overpay for generics, as “pharmacy benefit managers game opaque and arcane pricing practices to pad profits,” the white paper said.
Generics make up more than 90% of prescriptions in the U.S. but just 18% of drug spending. By one estimate, the use of generic and biosimilar drugs in place of their branded equivalents saved the healthcare system $338 billion in 2020 alone.
However, despite generics driving down prices relative to branded drugs, consumers are not benefiting from savings, the white paper said.
“Generics are overlooked when we talk about drug pricing issues in this country,” said Erin Trish, co-director of the USC Schaeffer Center, in a statement. “But the same lack of transparency that is causing outrage over high and rising spending on branded drugs is also creating issues in the generic drug space.”
Researchers highlighted consolidation as a key issue likely driving the profit-focused practices outlined in the white paper.
The three largest PBMs — which process almost 80% of all retail prescription claims — are all owned by large insurers: CVS Caremark by CVS Health, which owns Aetna; Express Scripts by Cigna; and OptumRx by UnitedHealth Group, which operates the largest private payer in the U.S., UnitedHealthcare.
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