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Pressure Mounts for PBM Reform Amid Rising Drug Costs

Writer's picture: IPMDIPMD

The Hidden Power of PBMs: A System Under Scrutiny


Pharmacy Benefit Managers (PBMs) have long operated in the shadows of the U.S. healthcare system, wielding significant influence over drug pricing and access. Recent developments — including federal investigations, state lawsuits, and bipartisan legislative efforts — have intensified scrutiny on these intermediaries, highlighting the urgent need for reform.


For years, PBMs have claimed to reduce costs by negotiating drug prices on behalf of insurers, but evidence suggests they often do the opposite. A 2018 IVN investigation revealed how PBMs control 80% of the prescription drug market through a small handful of companies, generating billions in revenue while squeezing independent pharmacies and inflating prices for consumers.


Grassley Asks RFK About Support for PBM Accountability


Senator Chuck Grassley questioned Robert F. Kennedy Jr. on his stance regarding accountability for PBMs during Wednesday's Senate Finance Committee hearing. Kennedy, whose position on the issue was unclear, responded positively, stating that he supports reforming the PBM industry.


Kennedy is President Donald Trump's pick for Health and Human Services Secretary. 


FTC Lawsuit Targets PBMs' Role in Drug Price Inflation


In a landmark move, the Federal Trade Commission (FTC) launched a legal challenge against the three largest PBMs — OptumRx, Caremark Rx, and Express Scripts — alleging they drove up insulin prices while blocking cheaper alternatives. According to the lawsuit, these PBMs manipulated rebate structures to favor high-cost drugs, leaving patients and taxpayers footing the bill.


This follows years of bipartisan concerns that PBMs create a perverse incentive system, where manufacturers must raise list prices to remain competitive in rebate negotiations. As a result, Americans pay far more for essential medications than patients in other countries.


State Attorneys General Take Action


It's not just the federal government taking aim at PBMs. States are stepping in as well.


In Oklahoma, Attorney General Gentner Drummond is pursuing CVS Caremark in a groundbreaking case alleging that the PBM underpaid independent pharmacies to the point of near collapse. The case is being heard in the state's new Pharmacy Benefit Manager Court, a first-of-its-kind initiative aimed at holding PBMs accountable for reimbursement practices that threaten local businesses and patient access to medications.


Other states, including Ohio, New York, and California, are launching similar lawsuits and policy reviews. The momentum suggests that the days of PBMs operating with little oversight may be numbered.


Congress Inches Closer to Reform


In Washington DC, lawmakers from both sides of the aisle have intensified efforts to rein in PBMs... CONTINUE READING

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