Pharmacy Benefit Managers (PBMs) are paid to negotiate the cost of prescription drugs. However, like provider networks, they are paid a % of the discount they negotiate.
The problem is; they don’t have an incentive to control manufacturer’s price. In fact, if the average wholesale price increases, the PBM gets paid more, either through a % of a larger rebate, or % of a larger discount.
The resulting net cost has increased 18% per year. PBMs allow the wholesale cost to increase, it increases their revenue.
- Fully-transparent or passthrough PBM contracts.
- Performance bonuses based on reducing net cost, rather than purported discounts.