‘It’s Beyond Unethical’: Opaque Conflicts of Interest Permeate Prescription Drug Benefits

By Bob Herman 
June 20, 2023

Employers across the country — from big names like Boeing and UPS to local school systems — pay consulting firms to handle a straightforward task with their prescription drug coverage: Get the best deals possible, and make sure the industry’s middlemen, known as pharmacy benefit managers, aren’t ripping them off with unfair contracts.

But a largely hidden flow of money between major consulting conglomerates and PBMs compromises that relationship, a STAT investigation shows. Some consulting firms often are getting paid more — a lot more — by the PBMs and health insurance carriers that they are supposed to scrutinize than by companies they are supposed to be looking out for.

Consulting firms can collect at least $1 per prescription from the largest PBMs, according to more than a dozen independent drug benefits consultants and attorneys involved with employers’ PBM contracts. That can go as high as $5 per prescription in extreme cases, three of those people said.

Consulting firms and brokerages may receive a certain dollar amount for each covered employee and member. Or they may share in the rebates that the PBMs pluck from pharmaceutical manufacturers — money that otherwise could be used by employers to lower premiums for their workers.

As the United States spends more than $600 billion per year on medicines, these little-known arrangements could add up to billions of dollars on their own, some experts estimate.

In exchange for the payments, the dominant PBMs get steady business from employers that rarely switch vendors, and they make it more likely that consulting firms and brokers won’t tattle if PBMs bake in more ways to extract profits from employers, nearly all of STAT’s sources said.

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