...And Corporate America Seeks to Cut PBMs Out of Loop

AUGUST 01, 2004
Ken Rankin

As a sign that community pharmacy's criticism of pharmacy benefit managers (PBMs) may be striking a receptive chord among many of the nation's biggest spenders on pharmaceutical products, a coalition of 50 Fortune 500 companies has announced plans to negotiate directly with drug manufacturers for lower prices.

The buyers' group, which collectively spent an estimated $4 billion on pharmaceutical products and services last year alone, foots the bill for prescription drug benefits for 5 million employees and retirees. Under the plan, the major corporations will band together to seek lower prices from manufacturers on Lipitor, Vioxx, Paxil, and dozens of other heavily prescribed brand name drugs.

The shift was prompted in large part by corporate suspicions that PBMs negotiate significant price rebates from pharmaceutical manufacturers but keep a large part of the savings rather than passing it on to plan sponsors. PBMs would be cut out of the loop altogether for certain drugs under the plan. PBMs would continue to manage the employers' payments for generics and less expensive branded drugs and would perform administrative chores for the corporations.