The Future of PBMs: From Profit-Driven to Patient-Focused
The Future of PBMs: From Profit-Driven to Patient-Focused
Join us in revolutionizing healthcare administration. Explore how Neon’s AI solutions can help your organization overcome the administrative burden and unlock the full potential of your healthcare team. Contact us today to learn more.
Join us in revolutionizing healthcare administration. Explore how Neon’s AI solutions can help your organization overcome the administrative burden and unlock the full potential of your healthcare team. Contact us today to learn more.
They might be the most despised part of our complex healthcare system.
Headlines paint them as evil profiteers—gouging independent pharmacies, manufacturers, health insurers, and jacking up costs for patients.
We're talking about Pharmacy Benefit Managers (PBMs).
On the one hand, it's hard to argue with this narrative. But is there more to the story? What value are they actually providing? Why do they exist in the first place?
PBMs sit at the center of drug manufacturers, pharmacies, payers, and patients. They negotiate rebates, decide which drugs are covered, and largely determine out-of-pocket costs. They decide which pharmacies can work with which payers, and how they’re paid. Originally, in the 1960s, PBMs were supposed to be objective third parties, cleaning up a messy system. But they’ve turned into their own beast.
They might be the most despised part of our complex healthcare system.
Headlines paint them as evil profiteers—gouging independent pharmacies, manufacturers, health insurers, and jacking up costs for patients.
We're talking about Pharmacy Benefit Managers (PBMs).
On the one hand, it's hard to argue with this narrative. But is there more to the story? What value are they actually providing? Why do they exist in the first place?
PBMs sit at the center of drug manufacturers, pharmacies, payers, and patients. They negotiate rebates, decide which drugs are covered, and largely determine out-of-pocket costs. They decide which pharmacies can work with which payers, and how they’re paid. Originally, in the 1960s, PBMs were supposed to be objective third parties, cleaning up a messy system. But they’ve turned into their own beast.
What's not working
PBMs make living with major medical conditions even more devastating by hiking prices on lifesaving meds. The FTC says the three major PBMs have raised costs for cancer and heart disease drugs, calling for investigations into practices that “deprive Americans of affordable, accessible healthcare.” The same report found that PBMs took $1.6 billion in excess revenue on just two cancer drugs over a three-year period. Also, in 2022, PBMs marked up the price of a pulmonary hypertension medication by 7,736% for commercial payers. It’s easy to see their corruption as adding insult to injury, quite literally, for patients who can’t access affordable drugs.
PBMs make living with major medical conditions even more devastating by hiking prices on lifesaving meds. The FTC says the three major PBMs have raised costs for cancer and heart disease drugs, calling for investigations into practices that “deprive Americans of affordable, accessible healthcare.” The same report found that PBMs took $1.6 billion in excess revenue on just two cancer drugs over a three-year period. Also, in 2022, PBMs marked up the price of a pulmonary hypertension medication by 7,736% for commercial payers. It’s easy to see their corruption as adding insult to injury, quite literally, for patients who can’t access affordable drugs.
Why are they dangerous?
Too much influence (three PBMs control 70% of the market)
No transparency around life-saving drug costs
Spread pricing that hurts independent pharmacies and low-cost access
The Silver Linning?
PBMs serve a role we don’t know how to effectively replace:
Their size and influence let them negotiate larger discounts and rebates.
Their scale of patient data access helps payers flag non-adherence and improves patient care from a population health level.
They can streamline pharmacy network benefits and claims, saving time and money for everyone.
So I don't think we shouldn't aim to “cut out the PBMs” entirely. Instead, let's push for them to return to their original role: as specialized service providers helping navigate increasingly complex drug coverage and reimbursement. Legislation that demands more transparency and bans spread pricing can help fix an imperfect but important role they play in the healthcare ecosystem.
Too much influence (three PBMs control 70% of the market)
No transparency around life-saving drug costs
Spread pricing that hurts independent pharmacies and low-cost access
The Silver Linning?
PBMs serve a role we don’t know how to effectively replace:
Their size and influence let them negotiate larger discounts and rebates.
Their scale of patient data access helps payers flag non-adherence and improves patient care from a population health level.
They can streamline pharmacy network benefits and claims, saving time and money for everyone.
So I don't think we shouldn't aim to “cut out the PBMs” entirely. Instead, let's push for them to return to their original role: as specialized service providers helping navigate increasingly complex drug coverage and reimbursement. Legislation that demands more transparency and bans spread pricing can help fix an imperfect but important role they play in the healthcare ecosystem.
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