The Role of Pharmacy Benefit Mangers in American Health Care: Pharmacy Concerns and Perspectives: Part 3

FEBRUARY 26, 2018
Brittany Hoffman-Eubanks
Pharmacy benefit managers (PBMs) have successfully leveraged their “middle-man” status to maximize profits while simultaneously harming American pharmacies and increasing costs to patients. As discussed in part 2, the unethical PBM tactics lead to undercompensation for pharmacies (with little to no recourse), and increased drug prices, limited formularies, and restricted pharmacy access for patients. This article will offer potential PBM solutions and highlight advocacy measures to address these pharmacy concerns.

To obtain better cost control, employer plan sponsors, and federal/state government need to demand complete transparency from PBMs for all health plans.1 Complete transparency would include all indirect and direct revenue streams that PBMs acquire as a result of administering prescription benefit plans. PBMs have been fined over the years for a variety of infractions but often they are related to rebates from drug manufacturers. For example, Advance PCS (now part of CVS/Caremark), paid $137.5 million in damages for rebate issues in 2005. 2 Similarly, Express Scripts was ordered to pay $9.5 million in 2008 for drug-switching and illegally retaining rebates, spread profits, and discounts in federally-funded health plans.2 It is likely that as a result of these issues, PBM transparency rules were enacted as part of the Patient Protection and Affordable Care Act (PPACA). These new rules, however, only apply to federal and state marketplace and Medicare Part D health plans. In 2016, the Centers for Medicare and Medicaid Services mandated Part D plans and their PBMs must provide all contracted pharmacies the reimbursement rates for drugs under maximum allowable cost (MAC) pricing system standards.

As an alternative to traditional PBMs, some plan sponsors have terminated the use of PBMs for their plan benefit administration. In 2016, 20 large employers (ex. Coca-Cola and Marriott) formed the Health Transformation Alliance (HTA) to eliminate the use of wasteful and expensive PBMs.3 Today, HTA includes more than 40 major corporations, covers more than 6 million lives, and has an annual spend of $25 billion.4

Many businesses, however, may not have the means to form these PBM alternative organizations but can seek out other resources such as transparent PBMs and pharmacy benefit administrators (PBAs). Transparent PBMs in contrast to their traditional counterparts do not profit from rebates, spreads, or other secret incentives.3 Alternatively, transparent PBMs charge a flat administrative fee for each prescription. For example, in the first year after Meridian switched to a transparent PBM their drug spend decreased by $2 million.5 Another option for plan sponsors is the use of a PBA to administer prescription drug benefits. PBAs handle administrative services for the plan sponsor (ex. claims processing) and the plan sponsor controls traditional PBM tasks (ex. formulary management, rebate negotiation, pharmacy contracts).3

Advocacy has also been utilized in recent years to address the PBM concerns by pharmacies and plan sponsors. In 2017, multiple pieces of legislation were introduced at the state and federal level to advocate for increased transparency and regulation of PBMs. For instance, in February of 2017, Representative Morgan Griffith (R-VA), introduced H.R.1038-Improving Transparency and Accuracy in Medicare Part D Spending Act to amend the Social Security Act to prohibit Medicare prescription drug plan sponsors from retroactively reducing payment on clean claims submitted by pharmacies. Similarly, the equivalent senate bill S.413 was also introduced in February 2017 by Senator Shelley Moore Capito (R-WV). Another important piece of legislation introduced in March 2017 is H.R. 1316 -Prescription Drug Price Transparency Act by Representative Doug Collins (R-GA). The purpose of H.R.1316 is to bring clarity to maximum allowable cost (MAC) pricing and, as of April 2017, was referred to committee.  Finally to address pharmacy access concerns, H.R. 1939/ and S. 1044–Ensuring Seniors Access to Local Pharmacies Act of 2017 were introduced in April/May of 2017 by Representative Morgan Griffith (R-VA) and Senator Shelley Capito (R-WV), respectively. The purpose of these bills is to give seniors more access to discounted copays for prescription drugs at their pharmacy of choice and increase competition among Part D drug plans ultimately leading to cost savings for the government and tax payers. Progress has been slow, but it is absolutely crucial for pharmacies across the country to stay financially viable and continue providing care to their patients.6-10

In conclusion, there have been multiple concerns levied about PBM tactics that have led plan sponsors and pharmacy stakeholders to push back. To address the conflicts of interest, unethical business practices, and wasteful practices of PBMs, plan sponsors have begun utilizing transparent PBMs and PBAs to help decrease their prescription drug benefit spend. What’s more, pharmacy stakeholders have introduced legislation with the goal of increasing transparency, providing oversight for PBM revenue streams, and proper reimbursement for drug products dispensed. While drug benefit services are necessary to distribute care to enrollees of plan sponsors it should not be at the expense of patients, plan sponsors, and pharmacies. New innovative care models and alternative administration services can be implemented to provide patient-centered care that is affordable, outcome based, and reasonable for all stakeholders.

Brittany Hoffmann-Eubanks, PharmD, MBA is cochair of Public Relations for the Illinois Pharmacists Association. 

1. National Community Pharmacists Association. The PBM Story. [Internet] Accessed 17 December 2017. Available from:
2. Barlas S. Employers and drugstores press for PBM transparency. P&T. 2015 Mar; 40(3): 206-208
3. National Community Pharmacists Association. Alternatives to Traditional PBMs. [Internet] Accessed 17 December 2017. Available from:
4. Health Transformation Alliance. [Internet] Accessed 17 December 2017. Available from:
5. Eban, K. “Painful prescription: pharmacy benefit managers make out better than their customers” Fortune Magazine. [Internet] Accessed 17 December 2017. Available from:
6. H.R.1038 – Improving Transparency and Accuracy in Medicare Part D Spending Act. [Internet] Accessed 17 December 2017. Available from:
7. S.413 – Improving Transparency and Accuracy in Medicare Part D Spending Act. [Internet] Accessed 17 December 2017. Available from:
8. H.R 1316 – Prescription Drug Price Transparency Act. [Internet] Accessed 17 December 2017. Available from:
9. H.R 1939 – Ensuring Seniors Access to Local Pharmacies Act of 2017. [Internet] Accessed 17 December 2017. Available from:
10. S.1044 – Ensuring Seniors Access to Local Pharmacies Act of 2017. [Internet] Accessed 17 December 2017. Available from:


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