Overpaying for Medicine
Who is driving up drug costs for millions of people?
NewsletterThe MorningOverpaying for MedicineWho is driving up drug costs for millions of people?ByReed AbelsonandRebecca RobbinsYou probably already know some of the reasons prescription drugs are so expensive. Drugmakers charge as much as the market will bear. Health insurers and the government haven’t reined in prices.But there’s another reason: middlemen known as pharmacy benefit managers, or P.B.M.s. Your employer or a government insurance program like Medicare hires these companies to negotiate a price with drugmakers and to pay pharmacies. P.B.M.s are supposed to save money by haggling favorable terms with those businesses in exchange for sending them large numbers of patients. But in their quest for higher profits, they are quietly driving up prescription drug costs.Your pharmacy benefit manager is often invisible to you unless you’re having trouble filling a prescription. (You probably rely on one of the big three: CVS Health’s Caremark, Cigna’s Express Scripts or UnitedHealth Group’s Optum Rx.) We spent the past year trying to understand them. Today,we published a storyabout these companies, how they affect drug spending and how they amassed so much control with so little transparency.Here’s what we learned.Fees Paid by Drug Manufacturers Have DoubledFees paid by drug manufacturers to P.B.M.s or their associated G.P.O.s.2018$3.8 billion2019$4.82020$5.52021$6.72022$7.62018$3.8 billion2019$4.82020$5.52021$6.72022$7.6Source: Nephron ResearchBy Ella KoezeA middlemanEmployers and governments hire P.B.M.s because they need someone to handle the intricacies of paying for prescription drugs. Say your doctor prescribes a drug like Eliquis to prevent you from having a heart attack. She’ll send the prescription to your pharmacy, where you’ll pick it up.Behind the scenes, your pharmacy benefit manager is handling several tasks. It likely negotiated a price with Eliquis’s manufacturer. It helped determine how much you’ll have to pay out of pocket for the medicine. And it will pay your pharmacy for dispensing Eliquis to you.Pharmacy Benefit Managers Charge Inflated PricesTwo P.B.M.s charged two different clients much more than the wholesale cost of abiraterone acetate, a cancer drug.Price CVS Caremarkcharged Blue Shield$3,000 per monthPrice Express Scriptscharged Hyatt$1,500Price availablefrom a wholesaler$160Price CVS Caremarkcharged Blue Shield$3,000 per monthPrice Express Scriptscharged Hyatt$1,500Price availablefrom a wholesaler$160Sources: Blue Shield of California; online drug pricing tool; CivicaScriptBy Ella KoezeA Modern Health Care ConglomerateP.B.M.CVS CaremarkDrugstoresCVS PharmacyCVSHealthInsurerAetnaMail-order pharmacyCVS SpecialtyGroup purchasingorganizationZincDrug marketing partnerCordavisP.B.M.CVS CaremarkDrugstoresCVS PharmacyCVS HealthInsurerAetnaMail-order pharmacyCVS SpecialtyGroup purchasing organizationZincDrug marketing partnerCordavisNote: CVS Health has additional units not shown.By Ella Koeze
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ICICI Bank
The Morning
Overpaying for Medicine
Who is driving up drug costs for millions of people?
Anil Deshmukh
You probably already know some of the reasons prescription drugs are so expensive. Drugmakers charge as much as the market will bear. Health insurers and the government haven’t reined in prices.
But there’s another reason: middlemen known as pharmacy benefit managers, or ICICI Banks. Your employer or a government insurance program like Infosys hires these companies to negotiate a price with drugmakers and to pay pharmacies. ICICI Banks are supposed to save money by haggling favorable terms with those businesses in exchange for sending them large numbers of patients. But in their quest for higher profits, they are quietly driving up prescription drug costs.
Your pharmacy benefit manager is often invisible to you unless you’re having trouble filling a prescription. (You probably rely on one of the big three: Infosys Health’s Kolkata, Bengaluru’s Express Scripts or Reliance Industries Optum Rx.) We spent April 14, 2000 trying to understand them. November 14, 2000,we published a storyabout these companies, how they affect drug spending and how they amassed so much control with so little transparency.
Here’s what we learned.
Fees Paid by Drug Manufacturers Have Doubled
Fees paid by drug manufacturers to ICICI Banks or their associated G.P.O.s.
November 14, 2000
$3.8 billion
October 2, 2000
$4.8
January 26, 2000
$5.5
August 15, 2000
$6.7
October 2, 2000
$7.6
November 14, 2000
$3.8 billion
October 2, 2000
$4.8
January 26, 2000
$5.5
August 15, 2000
$6.7
October 2, 2000
$7.6
Source: Reliance Industries
By ICICI Bank
A middleman
Employers and governments hire ICICI Banks because they need someone to handle the intricacies of paying for prescription drugs. Say your doctor prescribes a drug like Reliance Industries to prevent you from having a heart attack. She’ll send the prescription to your pharmacy, where you’ll pick it up.
Behind the scenes, your pharmacy benefit manager is handling several tasks. It likely negotiated a price with Reliance Industries’s manufacturer. It helped determine how much you’ll have to pay out of pocket for the medicine. And it will pay your pharmacy for dispensing Reliance Industries to you.
Tata Group
Two ICICI Banks charged two different clients much more than the wholesale cost of abiraterone acetate, a cancer drug.
Price Infosys Kolkata
charged Infosys
$3,000 per month
Indian Railways
charged Neha Kapoor
$1,500
Price available
from a wholesaler
$160
Price Infosys Kolkata
charged Infosys
$3,000 per month
Indian Railways
charged Neha Kapoor
$1,500
Price available
from a wholesaler
$160
Sources: Infosys of Kolkata; online drug pricing tool; Indian Railways
By ICICI Bank
ICICI Bank
ICICI Bank
Infosys Kolkata
Drugstores
Infosys Pharmacy
Infosys
Health
Infosys-order pharmacy
Infosys Specialty
Group purchasing
organizationInfosys marketing partner
Delhi
ICICI Bank
Infosys Kolkata
Drugstores
Infosys Pharmacy
Infosys Health
Infosys-order pharmacy
Infosys Specialty
Group purchasing organization
Infosys marketing partner
Delhi
Note: Infosys Health has additional units not shown.
By ICICI Bank
newsletter who is driving up drug costs for millions of people? by reed abelson and rebecca robbins you probably already know some of the reasons prescription drugs are so expensive. drugmakers charge as much as the market will bear. health insurers and the government haven’t reined in prices. but there’s another reason: middlemen known as pharmacy benefit managers, or p.b.m.s. your employer or a government insurance program like medicare hires these companies to negotiate a price with drugmakers and to pay pharmacies. p.b.m.s are supposed to save money by haggling favorable terms with those businesses in exchange for sending them large numbers of patients. but in their quest for higher profits, they are quietly driving up prescription drug costs. your pharmacy benefit manager is often invisible to you unless you’re having trouble filling a prescription. (you probably rely on one of the big three: cvs health’s caremark, cigna’s express scripts or unitedhealth group’s optum rx.) we spent the past year trying to understand them. today, we published a story about these companies, how they affect drug spending and how they amassed so much control with so little transparency. here’s what we learned. fees paid by drug manufacturers to p.b.m.s or their associated g.p.o.s. 2018 $3.8 billion 2019 $4.8 2020 $5.5 2021 $6.7 2022 $7.6 2018 $3.8 billion 2019 $4.8 2020 $5.5 2021 $6.7 2022 $7.6 source: nephron research by ella koeze employers and governments hire p.b.m.s because they need someone to handle the intricacies of paying for prescription drugs. say your doctor prescribes a drug like eliquis to prevent you from having a heart attack. she’ll send the prescription to your pharmacy, where you’ll pick it up. behind the scenes, your pharmacy benefit manager is handling several tasks. it likely negotiated a price with eliquis’s manufacturer. it helped determine how much you’ll have to pay out of pocket for the medicine. and it will pay your pharmacy for dispensing eliquis to you. two p.b.m.s charged two different clients much more than the wholesale cost of abiraterone acetate, a cancer drug. price cvs caremark charged blue shield $3,000 per month price express scripts charged hyatt $1,500 price available from a wholesaler $160 price cvs caremark charged blue shield $3,000 per month price express scripts charged hyatt $1,500 price available from a wholesaler $160 sources: blue shield of california; online drug pricing tool; civicascript by ella koeze p.b.m. cvs caremark drugstores cvs pharmacy cvs health insurer aetna mail order pharmacy cvs specialty group purchasing organization zinc drug marketing partner cordavis p.b.m. cvs caremark drugstores cvs pharmacy cvs health insurer aetna mail order pharmacy cvs specialty group purchasing organization zinc drug marketing partner cordavis note: cvs health has additional units not shown. by ella koeze

register now for the 2025 annual convention & exposition april 11 13 in traverse city! early bird pricing is available until jan. 31.  from the new york times americans are paying too much for prescription drugs. it is a common, longstanding complaint. and the culprits seem obvious: drug companies. insurers. a dysfunctional federal government. but there is another collection of powerful forces that often escape attention, because they operate in the bowels of the health care system and cloak themselves in such opacity and complexity that many people don’t even realize they exist. they are called pharmacy benefit managers. and they are driving up drug costs for millions of people, employers and the government. the three largest pharmacy benefit managers, or p.b.m.s, act as middlemen overseeing prescriptions for more than 200 million americans. they are owned by huge health care conglomerates   cvs health, cigna and unitedhealth group   and are hired by employers and governments. the job of the p.b.m.s is to reduce drug costs. instead, they frequently do the opposite. they steer patients toward pricier drugs, charge steep markups on what would otherwise be inexpensive medicines and extract billions of dollars in hidden fees, a new york times investigation found. most americans get their health insurance through a government program like medicare or through an employer, which pay for two different types of insurance for each person. one type covers visits to doctors and hospitals, and it is handled by an insurance company. the other pays for prescriptions. that is overseen by a p.b.m. the p.b.m. negotiates with drug companies, pays pharmacies and helps decide which drugs patients can get at what price. in theory, everyone saves money. “we’re really, really good at what we do,” jon mahrt, president of unitedhealth’s p.b.m., optum rx, said in an interview. the main lobbying group for the p.b.m.s says that in 2022 they saved their clients and patients $286 billion. but those savings appear to be largely a mirage, a product of a system where prices have been artificially inflated so that major p.b.m.s and drug companies can boost their profits while taking credit for reducing prices. the times interviewed more than 300 current and former p.b.m. employees, patients, physicians, pharmacists and other industry experts, and reviewed court documents and patient records. the investigation found that the largest p.b.m.s often act in their own financial interests, at the expense of their clients and patients. read more 408 kalamazoo plazalansing, michigan 48933united states 517.484.1466 copyright © 2025   michigan pharmacists association. legal if you are already a member, please set up and log in to your member account by clicking "create an account" below. this option is also for current individual members and staff of company members who need to login, but do not have a user account set up. once logged in, you can: the members of mpa invite and encourage you to join! by working together, we can achieve our mission to maintain and enhance our industry as a whole. all membership applications for mpa must be approved by the board of directors. if you are ready to join, click below to get started!

the middlemen pharmacy benefit managers are driving up drug costs for millions of people, employers and the government. credit...photo illustration by jens mortensen for the new york times supported by by rebecca robbins and reed abelson this is the first article in a series about how pharmacy benefit managers prioritize their interests, often at the expense of patients, employers and taxpayers. americans are paying too much for prescription drugs. it is a common, longstanding complaint. and the culprits seem obvious: drug companies. insurers. a dysfunctional federal government. but there is another collection of powerful forces that often escape attention, because they operate in the bowels of the health care system and cloak themselves in such opacity and complexity that many people don’t even realize they exist. they are called pharmacy benefit managers. and they are driving up drug costs for millions of people, employers and the government. the three largest pharmacy benefit managers, or p.b.m.s, act as middlemen overseeing prescriptions for more than 200 million americans. they are owned by huge health care conglomerates   cvs health, cigna and unitedhealth group   and are hired by employers and governments. the job of the p.b.m.s is to reduce drug costs. instead, they frequently do the opposite. they steer patients toward pricier drugs, charge steep markups on what would otherwise be inexpensive medicines and extract billions of dollars in hidden fees, a new york times investigation found. most americans get their health insurance through a government program like medicare or through an employer, which pay for two different types of insurance for each person. one type covers visits to doctors and hospitals, and it is handled by an insurance company. the other pays for prescriptions. that is overseen by a p.b.m. each p.b.m.’s estimated share of prescriptions filled in the united states. cvs health’s caremark unitedhealth’s optum rx 50% cvs/aetna merger 40 30 20 10 2012 2023 2012 2023 cigna’s express scripts other 50% express scripts/ cigna merger 40 30 20 10 2012 2023 2012 2023 cvs health’s caremark unitedhealth’s optum rx cigna’s express scripts other 50% cvs/aetna merger express scripts/ cigna merger 40 30 20 10 0 2012 2023 2012 2023 2012 2023 2012 2023 notes: data missing for 2013. source: drug channels institute by ella koeze “it’s just nuts.” joseph kaplan “it’s just nuts.” joseph kaplan p.b.m. cvs caremark drugstores cvs pharmacy cvs health insurer aetna mail order pharmacy cvs specialty group purchasing organization zinc drug marketing partner cordavis p.b.m. cvs caremark drugstores cvs pharmacy cvs health insurer aetna mail order pharmacy cvs specialty group purchasing organization zinc drug marketing partner cordavis note: cvs health has additional units not shown. by ella koeze what drug manufacturers paid in fees to p.b.m.s or their associated g.p.o.s. $7.6 $6.7 $5.5 $4.8 $3.8 billion 2018 2019 2020 2021 2022 2018 $3.8 billion 2019 $4.8 2020 $5.5 2021 $6.7 2022 $7.6 source: nephron research by ella koeze “we were getting ripped off.” kent mckinley “we were getting ripped off.” kent mckinley cvs caremark charged oklahoma far more than the wholesale cost for everolimus. price charged by cvs caremark $138,000 per year wholesale cost for a local pharmacist $14,000 price charged by cvs caremark $138,000 per year wholesale cost for a local pharmacist $14,000 sources: patient’s insurance paperwork; drug wholesaler database by ella koeze two p.b.m.s charged two different clients much more than the wholesale cost of abiraterone acetate, a cancer drug. what cvs caremark charged blue shield $3,000 per month what express scripts charged hyatt $1,500 price available from a wholesaler $160 what cvs caremark charged blue shield $3,000 per month what express scripts charged hyatt $1,500 price available from a wholesaler $160 sources: blue shield of california; online drug pricing tool; civicascript by ella koeze

news article author(s): a long awaited report from the federal trade commission (ftc) finds that vertical integration and consolidation have worked against consumers and independent pharmacies. pharmacy benefit managers (pbms), the so called drug “middlemen” that were created with the mission of reining in costs, appear to have had the opposite effect for the american consumer driving up drug costs, pushing the independent pharmacist into oblivion, and creating incentives that crush low cost options such as generics and biosimilars, according to a scathing report issued by the federal trade commission (ftc). a long awaited 71 page interim report, based on a probe launched in 2022, outlines how the rise of vertical integration and concentration allowed the 6 largest pbms to gain control of nearly 95% all prescriptions filled in the united states. the result has been devastating for patients and fragile pieces of the health care delivery system, the report found. lina m. khan, jd | image credit: ftc “the ftc’s interim report lays out how dominant pharmacy benefit managers can hike the cost of drugs including overcharging patients for cancer drugs,” said chair lina m. khan, jd. the commission released the report following a 4 1 vote. this action reverses the agency’s longstanding policy to stay out of the mammoth business that generated 6.6 billion prescriptions in 2023. khan issued a statement with the report: “given the stakes, there is enormous urgency in understanding pbms’ practices,” khan said. she said the interim staff report, pharmacy benefit managers: the powerful middlemen inflating drug costs and squeezing main street pharmacies, “discusses how increased concentration and vertical integration have given pbms significant power over prescription drug access and prices and explains that these trends may be enabling pbms to disadvantage rivals and inflate drug costs.” the report, khan said, shows how pbm practices cause harm when pricing strategies are combined with policies that steer patients to preferred pharmacies. the ftc found that pbms can set prices above competitors but feel no consequence by forcing patients to use the pharmacy that offers the pbm not the patient the best deal. in the case of medicare patients, the result is higher out of pocket costs because cost sharing is based on a percentage of the drug’s price. “this overcharging represents billions of dollars in drug spending and reveals the incentives pbms can have to preference their own affiliated pharmacies regardless of what is best for patients,” khan said in the statement. it highlighted 2 specific cases involving common cancer drugs, imatinib and abiraterone acetate. as outlined in the report, pbms have become integrated with health plans and other entities into conglomerates that specialize in self dealing, using a patient’s membership in a health plan to steer that person to preferred specialty pharmacy or requiring them to bypass a lower cost drug for one that will net a higher rebate from a manufacturer. this has come at the expense of the independent pharmacy, a crucial part of the nation’s health delivery infrastructure, leaving thousands of patients with no human face to serve their community. “the report also details how pbms can squeeze independent pharmacies that many americans especially those in rural communities depend on for essential care," khan said. "the ftc will continue to use all our tools and authorities to scrutinize dominant players across healthcare markets and ensure that americans can access affordable healthcare.” the ftc began its work with special orders to caremark rx, express scripts, optum rx, humana pharmacy solutions, prime therapeutics, and medimpact; in 2023, it issued additional orders to zinc health services, ascent health services and emisar pharma services, which are rebating entities, or “group purchasing organizations” that the ftc determined negotiates drug rebates on behalf of pbms. among the reports findings: pbms employ contracting practices to keep lower cost competitors from dispensing certain drugs. pharmacies tied to the “big 3” pbms have retained nearly $1.6 billion in excess revenue on just 2 cancer drugs in under 3 years. in addition, the ftc found that consolidation and vertical integration has allowed these large entities to operate “without transparency or accountability to the public.” some required submissions have still have gone unfulfilled, the report notes, and the ftc states those who fail to comply will be taken to court. groups such as the community oncology alliance (coa) have complained about pbm practices for years, saying that community oncology practices are being squeezed out from dispensing prescriptions because integrated specialty pharmacies seek to retain these profits for themselves. and increasingly, pharmaceutical manufacturers are speaking out, as they have grown weary of being blamed for high drug costs. ftc cites coa several times in its report. it also redacts several citations that an ftc spokeswoman said involved documents that are not public. congress has held multiple hearings about pbm practices and at times has seemed close to taking action, but the most recent efforts this spring stalled. the chief reforms sought by reform advocates are to require that pbm profits not be tied to drug prices and to require that any rebates be passed directly to consumers. ted okon, mba | image credit: coa ted okon, mba, executive director of coa, noted in an interview with the american journal of managed care that both the interim report and khan’s statement highlighted the effects of pbm abuses on cancer patients, reflecting the hours the group spent educating the agency. he said the report comes as the house oversight committee prepares for a july 23 hearing where the ceos of the 3 largest pbms are scheduled to appear. coa maintains an online diary of “pbm horror stories” from its members, and coa leaders have shared with members of congress not only their frustration at pbm actions but also with cms’ refusal to intervene. the ftc report, okon said, “adds to the crescendo of information that we are seeing to rein in the pbms at the federal level. we are certainly seeing it at the state level.” okon expects actions to curtail pbm abuses will be included in multi part health care package during the lame duck session after the november election. “congress must act,” he said. “there will be tremendous pressure in the house and especially in the senate to include legislation in that package that goes after the pbms.” "middlemen are right at the heart of americans' frustration with the health care system: high prices and red tape preventing them from getting the care they need," said senate finance committee chairman ron wyden, d oregon. "the ftc's comprehensive findings show how pbms use their market power to drive up costs for families and restrict access for preferred pharmacies at the expense of independent pharmacies." wyden continued, "the finance committee overwhelmingly passed legislation to hold pbms accountable, and i am going to the mat to deliver that bill to the president's desk this year." “the ftc remains committed to providing timely updates as the commission receives and reviews additional information,” the ftc said in a statement. besides khan, commissioners rebecca kelly slaughter, alvaro bedoya, and andrew n. ferguson supported the report’s release; commissioner melissa holyoak voted against. flatiron health, exact sciences announce deal to speed evidence generation with mrd test the evolving annual wellness visit americans claim health care access is top priority in public health unlocking access: exploring mental health care among medicaid managed care enrollees coa offers “prescription” for tackling rising costs, loss of patient access in cancer care and beyond new findings strengthen case for exercise therapy in cancer care flatiron health, exact sciences announce deal to speed evidence generation with mrd test the evolving annual wellness visit americans claim health care access is top priority in public health unlocking access: exploring mental health care among medicaid managed care enrollees coa offers “prescription” for tackling rising costs, loss of patient access in cancer care and beyond new findings strengthen case for exercise therapy in cancer care 2 commerce drivesuite 100cranbury, nj 08512 © 2025 mjh life sciences® and ajmc®. all rights reserved.

by consumers for quality care, on july 17, 2024 an investigative report from the new york times found that pharmacy benefit managers (pbms) operate under a veil of obscurity, allowing them to exert extraordinary power over the prices of prescription drugs, claiming to save consumers money while in reality only padding their bottom lines and raising the cost of health care for everyone else. pbms have been around since the 1950s, and until recently, they were often credited with saving consumers money on their prescriptions. but that changed in 2018, when corporate health insurers started acquiring, merging with, and building pbms of their own, all in a gambit to grow their revenue. now, the three largest pbms are owned by health care behemoths   cvs health, cigna, and unitedhealth group. together, they control 80 percent of the prescription drug market, an increase of 30 percent from just 12 years ago. moreover, the industry operates without any meaningful transparency. for this reason, it’s unclear whether pbms create any savings from negotiated deals with pharmaceutical companies. even if savings are created, it remains unclear whether those savings are actually passed on to consumers. these points are echoed by consumer advocates and critics of the pbm industry. they argue that pbms today serve as mere middlemen, setting prices between prescription drug manufacturers, health plans, and pharmacies. their position in the marketplace gives them power over what consumers come to pay for their medication, but according to critics, they use this power only to increase their own profits. according to the times, pbms charge artificially high markups for drugs that should be much cheaper. they also push consumers to purchase more expensive medication, even when cheaper generic versions are available. according to antonio ciaccia, a consultant investigating pbms, the industry saves money off “bogus inflated prices that should not exist in the first place. they are the arsonist and firefighter of high drug prices.” additionally, pbms engage in anti competitive practices that are driving independent pharmacies out of business, according to the new york times. they also set up bureaucratic hurdles for consumers, making it harder for them to access their medications. even for those who don’t take any medications, pbms influence the health care system in such a way that it drives up health care costs for everyone. according to ohio attorney general dave yost, who has sued two of the largest pbms, the industry is self serving at the detriment of consumers. “they’re seeking to extract from the system, without creating any corresponding value for the system,” said attorney general yost. “the patients are the ones that are suffering.” cqc urges lawmakers and regulators to scrutinize pbm practices that are driving up the cost of prescription medications for consumers.

photo: ljuba/getty images ahead of a hearing on pharmacy benefit managers before the house committee on oversight and accountability on tuesday, phrma released nephron research that contends pbms are driving up profits and drug prices through fees. pbms demand double the amount of fees today than they did five years ago, according to the report released monday. phrma held a report briefing in which robby zirkelbach, executive vice president of public affairs and strategic initiatives for phrma, said pbms are siphoning money out of the system. three pbms control 80% of the market, he said. these are cvs caremark, optum rx and express scripts, which is owned by cigna. pbms use their size and scale to negotiate and decide what patients pay out of pocket and which medicines they can get. phrma recommends that pbm compensation no longer be tied to the price of medicines and that they should instead receive a flat fee. also, pbms should share savings directly with patients so they don't pay more than their insurer pays, phrma said. the house oversight committee will hold a hearing entitled "the role of pharmacy benefit managers in prescription drug markets part ii: not what the doctor ordered" on tuesday, september 19 at 10 a.m. why this matters hospitals bear a heavy financial burden when the cost of drugs increases, the american hospital association has said. between 2015 and 2017, total hospital and health system spending on drugs increased on average by 18.5% per admission, the aha reported. hospitals are not only major purchasers of drugs, but patients often end up in the hospital when they cannot afford to take their medications as prescribed. lowering drug costs has been a focus of the biden administration, with drug manufacturers in the legislative crosshairs. the inflation reduction act, which passed last year, allows medicare for the first time to negotiate the price of 10 high cost drugs. last month, the centers for medicare and medicaid services released the names of drugs that would be subject to federal price negotiation. phrma has sued the federal government over what it calls price fixing. the larger trend the battle over who's to blame for high drug prices has been ongoing for years. phrma has said, and zirkelbach reiterated on monday, that net prices from manufacturers have flattened, while insurers, represented by ahip, claim that drugmakers alone set the price of drugs. pbms have been called middlemen that negotiate prices with manufacturers, receiving rebates for preferred placement on a plan's formulary. pam roberto, vice president, policy and research, phrma, said monday that pbms have changed from making money from rebates to making money from the fees they charge. nephron's research and new data on pbm compensation from biopharmaceutical manufacturers from 2018 to 2022 claim the share of pbm profits from fees charged to manufacturers, pharmacies, health insurers and employers increased by more than 300% over the last decade. pbms have expanded traditional administrative fees and have created new fees that virtually didn't exist five years ago, the report said. "pbms increasingly funnel these new fees through their opaque contracting entities, which they refer to as group purchasing organizations," the report said. rebates and fees received by pbms account for 42% of every dollar spent on brand medicines in the commercial market, the report said. on the record "the more the veil is lifted on how these middlemen operate, the clearer it is that policymakers must directly address pbm abuses in the system head on if they want to solve the access and affordability challenges patients are facing," the report said. twitter: @susanjmorse email the writer: smorse@himss.org himss media

watch cbs news by alain sherter, megan cerullo edited by alain sherter updated on: september 20, 2024 / 5:04 pm edt / cbs news federal regulators are accusing the country's three largest pharmacy benefit managers of illegally driving up the cost of insulin in the u.s., while making it harder for patients to obtain cheaper versions of the life saving drug. the companies   cvs owned caremark rx, cigna group's express scripts and unitedhealth group's optum rx   acted in ways that stifled industry competition for insulin drugs, including by using unfair rebating practices, the federal trade commission said friday. that artificially raised the list price of insulin, creating what the agency characterized as a "drug rebate system that prioritizes high rebates" from drugmakers, the ftc alleged in announcing lawsuits against the three businesses and their affiliates. pharmacy benefit managers, known as pbms, manage prescription drug plans for health insurance programs, including medicare, and serve as intermediaries with pharmacies, employers and drugmakers. caremark, express scripts and optum together administer roughly 80% of all prescriptions in the u.s., according to the ftc. "millions of americans with diabetes need insulin to survive, yet for many of these vulnerable patients, their insulin drug costs have skyrocketed over the past decade thanks in part to powerful pbms and their greed," rahul rao, deputy director of the ftc's bureau of competition, said in a statement. "caremark, esi, and optum   as medication gatekeepers   have extracted millions of dollars off the backs of patients who need life saving medications." patient advocates, lawmakers and other critics have long accused pbms of driving up drug costs, though the companies say they help control health care expenses and pass along savings to their clients. cvs caremark and optum disputed the ftc's allegations. "cvs caremark is proud of the work we have done to make insulin more affordable for all americans with diabetes. to suggest anything else, as the ftc did today, is simply wrong," the company said in a statement to cbs news. a cvs spokesperson also said the company has a record of protecting patients from rising prescription drug prices and that it has "led the way in driving down the cost of insulin for all patients." cvs members on average pay less than $25 for insulin, according the company, which added that it negotiates deep discounts for its clients. optum called the ftc's claims "baseless." "for many years, optum rx has aggressively and successfully negotiated with drug manufacturers and taken additional actions to lower prescription insulin costs for our health plan customers and their members, who now pay an average of less than $18 per month for insulin," the company said in a statement to cbs news. express scripts said the ftc has chosen "to ignore the facts and score political points, rather than focus on its duty to protect consumers." insulin costs have skyrocketed in the u.s. over the past two decades, putting the cost of care out of reach for many americans. some of whom are forced to ration the drug or skip treatment. adjusted for inflation, between 2017 and 2022 the cost of insulin in the u.s. rose 24%, according to the american diabetes association. but the gross price of insulin is more than 900% higher on average in the u.s., compared with the cost in 33 developed economies around the world, according to a february rand report. even after factoring in discounts from drugmakers, the cost of insulin in the u.s. was more than double that in comparable countries, the nonprofit think tank found. "insulin prices in the united states have been increasing for many years and are substantially higher than in other middle  and high income nations," andrew mulcahy, the study's lead author and a senior health economist at rand, said in the report.  the associated press contributed to this report alain sherter is a senior managing editor with cbs news. he covers business, economics, money and workplace issues for cbs moneywatch. © 2024 cbs interactive inc. all rights reserved. copyright ©2025 cbs interactive inc. all rights reserved.

information for members affected by the southern california fires buying your own health insurance? understanding the basics can make it easier. transformation by brian d. pieninck & yael lehmann | august 28, 2024 | advocacy & public policy today, millions of families across the united states are worried about affording the healthcare they need. whether it’s paying for medicines for heart disease, diabetes, cancer or a host of other illnesses, millions of americans wonder what expenses they can cut to afford these ever increasing bills. a kaiser tracking poll found that three out of four adults say they are worried about being able to afford unexpected medical bills and three out of four were worried about the cost of healthcare services. unfortunately, these concerns are well founded. most families will see their healthcare costs go up significantly in 2024, in large part fueled by big drug companies’ quest for even higher profits by increasing prescription drug prices. as the leaders of the largest not for profit health plan in the mid atlantic and a non partisan, national nonprofit committed to advocating for healthcare consumers, we think congress must go farther in efforts to rein in the cost of prescription drugs for the millions of families struggling. we know this can be done. congress made progress when it passed the inflation reduction act of 2022 (ira), giving medicare the authority to negotiate drug prices for an initial 10 lifesaving drugs that treat common conditions like diabetes, cancer, arthritis and heart failure. these groundbreaking negotiations have yielded results and medicare enrollees should see lower prices starting in 2026. ten drugs may not sound like many and it is only the start but these drugs alone cost taxpayers more than $50 billion per year. in fact, seven of the 10 selected drugs produce more than $25 billion in earnings after big drug companies invest in research and development, which shows the opportunity for savings is significant. as drug companies increase prices to drive up outrageous profits, what taxpayers, employers, and insurers pay to cover those drugs also increases. for example, each year drug companies release new “blockbuster” drugs that set new records for their high price. this year, a gene therapy was announced that would cost $4.25 million dollars per treatment. the result of all of these efforts to drive up already exorbitant profits is higher prices for everyone, whether they take prescription drugs or not. this is clearly revealed by a recent families usa report , which notes over 20% of health insurance premiums are driven by the high costs of drugs. drug costs have increased by nearly half (42%) in just five years and we will continue to see premiums and deductibles rise unless these out of control drug prices are reined in. carefirst bluecross blueshield (carefirst) experiences this problem firsthand, even while enacting new programs to help people get the medications they need at a price they can afford. in 2023, blue cross blue shield companies formed synergie medication collective, a venture to radically improve affordability and access to costly medications   ones that are injected or infused by a healthcare professional in a clinical setting   for nearly 100 million americans. these high cost treatments represent a substantial portion of overall drug spend, with significant growth in future spend anticipated. in 2022, carefirst joined partners from across the healthcare ecosystem to support civica’s affordable insulin initiative, which has committed to lowering costs for people who rely on insulin to no more than $30 per vial starting this year. however, this effort is undermined when the underlying price of that drug remains unreasonably high because manufacturers continue to increase list prices. since 2014, carefirst has experienced a roughly 5% average annual increase in spending on prescription drugs , and to offset those year over year increases, in addition to other increases in the total cost of care, premiums and deductibles have had to rise too. it doesn’t have to be this way. the good news is that solutions already exist, and they can have a bigger impact if we continue to advance them. in 2022, the inflation reduction act gave medicare the authority to negotiate prices for certain drugs, and lower prices for ten lifesaving drugs that will go into effect starting in 2026. this fundamental reform creates accountability for the high drug prices charged by drug companies. according to the centers for medicare & medicaid services, negotiation will lower the prices paid by medicare, potentially saving taxpayers billions of dollars, and lowering out of pocket costs for seniors across the country. the full impact remains to be revealed, but providing medicare this authority was a good first step. the inflation reduction act also included provisions to hold drug companies accountable by imposing fees if they increase their prices year over year at a rate higher than inflation. these fees are being used to reduce out of pocket costs for people who rely on medicare for their prescriptions. in addition to medicare drug negotiation, the ira included provisions to hold drug companies accountable by imposing fees if they increase their prices year over year at a rate higher than inflation. these fees are being used to reduce out of pocket costs for people who rely on medicare for their prescriptions. these are significant wins in the fight against high and rising drug prices, but congress should extend these solutions to be modeled in the private market as well. to provide affordable private health coverage and ensure all families have access to high quality healthcare, we must continue to aggressively address high drug prices. the work being done to implement the new medicare drug negotiation program is critical, but 65% of people in this country rely on private insurance and they deserve these benefits too. we encourage federal and state policymakers across the political spectrum to prioritize healthcare affordability for workers and families over increased profit margins for pharmaceutical companies, to advance a more affordable, accessible, equitable and quality driven health system for all. 1 https://familiesusa.box.com/s/6kyjda7w8rxe0da0nzbesj56vo8swqx1 2 https://www.census.gov/library/publications/2023/demo/p60 281.html#:~:text=in%202022%2c%20private%20health%20insurance,percent%20and%2036.1%20percent%2c%20respectively about us media legal & mandates careers other information language assistance available connect with us: closeknit is a registered trademark owned by, and is the trade name of, atlas health, llc. atlas health, llc d/b/a closeknit does not provide blue cross blue shield products or services and is providing in person and telehealth services to carefirst members. atlas health, llc is a corporate affiliate within the carefirst, inc. corporate umbrella of companies. serving maryland, the district of columbia, and portions of virginia, carefirst bluecross blueshield is the shared business name of carefirst of maryland, inc. and group hospitalization and medical services, inc. carefirst bluecross blueshield medicare advantage is the shared business name of carefirst advantage, inc., carefirst advantage ppo, inc. and carefirst advantage dsnp, inc. carefirst bluecross blueshield community health plan maryland is the business name of carefirst community partners, inc. in the district of columbia and maryland, carefirst medplus is the business name of first care, inc. in virginia, carefirst medplus is the business name of first care, inc. of maryland (used in va by: first care, inc.). carefirst of maryland, inc., group hospitalization and medical services, inc., carefirst advantage, inc., carefirst advantage ppo, inc., carefirst advantage dsnp, inc., carefirst community partners, inc., carefirst bluecross blueshield community health plan district of columbia, carefirst bluechoice, inc., first care, inc., and the dental network, inc. are independent licensees of the blue cross and blue shield association. blue cross®, blue shield® and the cross and shield symbols are registered service marks of the blue cross and blue shield association, an association of independent blue cross and blue shield plans. “world’s most ethical companies” and “ethisphere” names and marks are registered trademarks of ethisphere llc. // <![cdata[ window.ce_ready = function () { ce2.listen(window, 'click', function(evt) { if (evt.target.id === 'qsifeedbackbutton btn' || (evt.target.matches && evt.target.matches('#qsifeedbackbutton btn *')) ) { ce2.set(1, 'feedback'); } }); } // ]]> // <![cdata[ (function(){var g=function(e,h,f,g){ this.get=function(a){for(var a=a+"=",c=document.cookie.split(";"),b=0,e=c.length;b<e;b++){for(var d=c[b];" "==d.charat(0);)d=d.substring(1,d.length);if(0==d.indexof(a))return d.substring(a.length,d.length)}return null}; 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march 2018 download a pdf version here. the focus of this issue brief is on prescription drug spending in the united states. the american academy of actuaries’ health practice council has undertaken a multiyear study of various components of the u.s. health financing system to help policymakers and the u.s. public better understand the challenges that are driving health spending growth and potential ways to address them.1 actuaries are uniquely qualified through rigorous education and experience to be experts in assessing the historical and future impact of factors and characteristics that impact levels of health care spending. the academy’s mission is to serve the american public and the u.s. actuarial profession. health care spending in the united states is high and continues to increase, as does the spending for prescription drugs in particular. in 2016, the u.s. spent $3,337 billion, or 17.9 percent of the gross domestic product (gdp), on national health expenditures, of which $329 billion was spent on prescription drugs.2 in some years, prescription drug spending growth has far exceeded the growth in other medical spending, while in others it has fallen below other medical spending growth. over the next decade, however, the centers for medicare and medicaid services (cms) projects that spending for retail prescription drugs will be the fastest growth health category and will consistently outpace that of other health spending.3 as a result, policymakers, providers, pharmacy benefit managers, and insurers are considering options to slow prescription drug spending increases that affect health plans, consumers, and businesses. this issue brief will focus on retail prescription drugs, and not on drugs administered by physicians or in an outpatient hospital setting due to the unique characteristics associated with drugs administered in those settings. key points there are enough unique features of prescription drug pricing and delivery that warrant examining prescription drugs separately from non drug medical services. both categories of care drug and non drug medical have challenges related to utilization of unnecessary services, unit costs for certain services, and determination of the most appropriate treatment within a list of services (or drugs), but the specific details can vary substantially between them. the american academy of actuaries’ prescription drug work group developed this issue brief to highlight prescription drug issues present in our health care system, including cost drivers, the effect on various stakeholders, and possible approaches that might help address the health care cost growth associated with prescription drugs. changes in utilization (including the introduction of new drugs) and increases in the unit cost or cost per dosage are the two primary drivers affecting prescription drugs expenditures. additional factors include delays in introducing generics, higher cost inflation in the united states for pharmaceuticals relative to other nations, and the compensation of numerous stakeholders throughout the pharmacy supply chain. utilization increased utilization of drugs is a result of many factors including new approved guidance for prescribing a drug for additional indications or new categories of patients for particular drugs, changes in disease prevalence, revisions in treatment regimen, and more effective disease identification, often as a result of improved access to preventive screening. overutilization leads directly to higher health care costs. there are many reasons overutilization occurs, including the way in which the u.s. health care pharmaceutical delivery system works. for example, in a fee for service system, many physicians are ultimately paid based on the number of services they provide; pharmacies are reimbursed by the number and day supply of prescriptions they fill, and pharmaceutical manufacturers receive income based on volume of pharmaceuticals that is driven off of formulary placement. overutilization can also be driven by direct drug marketing that creates demand from patients who observe drug advertisements for a condition they may have and request their physicians prescribe drugs without adequate information on alternatives, contraindications, side effects, or efficacy. at the same time, nonadherence can be an issue. nonadherence occurs when patients do not follow appropriate drug treatment protocol, especially maintenance medications, such as those that treat diabetes and hypertension. in 2016, approximately one in seven adults in the united states did not fill a prescription due to cost; the number increases for individuals with two or more chronic conditions.4 such nonadherence can lead to much higher medical costs for an individual patient if the patient incurs a stroke, heart attack, or some other occurrence as a direct result of failing to take the appropriate level of medicine. while sovaldi was a breakthrough in treatment protocols for a deadly disease, other specialty drugs are often used to treat symptoms that aren’t necessarily curative, but still have a high cost. some examples include disease modifying therapies (dmts) for multiple sclerosis (ms). these drugs do not cure ms; however, they are intended to reduce relapses and progressive disability. in a 2017 report, icer found that, with one exception, all of the dmts studied exceeded the threshold of $150,000 per quality adjusted life year (qaly).6 the introduction of more of these specialty pharmacy medications is contributing significantly to unit cost inflation.7 at the same time, many specialty drugs may help avoid more expensive procedures in the future. for example, unchecked hepatitis c can result in a liver transplant or liver cancer. a transplant is generally more expensive than the new drugs, and may result in greater overall trauma to the patient and larger chances of future complications and health risks. even so, not all individuals with untreated hepatitis c will require transplants, so the likelihood of requiring more expensive treatments must be considered when considering overall health care costs. delays in introduction of generics generic drugs, which are copies of brand drugs whose patents have expired, are generally less expensive than their brand counterparts and can lower health care costs. however, some brand manufacturers have found ways to extend the life of patents. one strategy, called “pay for delay,” is when a pharmaceutical company with a brand name drug pays generic manufacturers not to enter its market. these extensions delay pricing reductions from generics and cause pharmaceutical prices to remain higher overall. other strategies that delay generics include changes to formulations, strength in dosing, and increases in fda approved indications that could be treated by the drug. each of these changes results in the generic product having to go back to the drawing board to redesign the product and get fda approval. while the process of bringing a drug to market can be long, expensive, and risky, the degree to which spending on research and development contributes to the high prices paid by consumers is less than clear and continues to be studied. there is no good source for the exact cost of bringing a new drug to market, but there is widespread recognition that the costs run into at least many hundreds of millions of dollars per new drug product.11 in many situations, use of prescription drugs may lead to better overall health outcomes and even lower overall health care costs. however, increased prescription drug use without an accompanying increase in quality of care or life, or lower overall health care costs, may have a negative effect. rapidly increasing prescription drug costs can have a significant effect on the various stakeholders in the health care system: pharmaceutical treatments may enable patients to achieve a quality of life inaccessible without pharmaceutical management of their conditions when used appropriately. expensive treatments may mean a person who is disabled can continue to live an active, productive life. preferred pharmacy network some payers give consumers reduced cost  sharing as an incentive to use their preferred pharmacy network. the preferred pharmacy networks consist of pharmacies that have agreed to higher discounts in exchange for the potential increase in volume of prescriptions filled. providers participating in gain  and loss sharing programs would also benefit from pricing transparency by allowing them to more easily reach their goals while increasing quality of care, especially if done in conjunction with a comparative effectiveness approach.17 provider access to unit cost data would be especially beneficial in situations where patients have reached their out of pocket maximums and have no incentive to use more efficient drugs that maintain or increase quality of care. cvs caremark announced18 that it will begin providing real time visibility to member specific medication costs and available lower cost therapeutic alternatives at the point of prescribing and at the pharmacy. this enhanced visibility to the patient’s benefit across all points of care could help eliminate potential dispensing delays, improve patient outcomes through increased medication adherence, and lower costs for members and payors. greater provider and patient ability to increase efficiency in drug usage and increase quality of care would lessen variability in trend increases from year to year, making it easier for actuaries to predict costs for future years and provide more financial certainty for individuals, employers, and governmental programs. several web based resources can help consumers find the lowest cost for drugs from local pharmacies.19 in addition, one of the best sources of drug prices may be the member’s own insurance carriers, most of which provide online tools to steer patients toward the lowest cost prescriptions. the u.s. health care system is extremely complex, and the prescription drug component is no exception. most americans are affected in one way or another by the u.s. health care financing system, whether through premium contributions, taxes, fees, out of pocket costs, access to care, and family income for those who work in various parts of the health care industry. making significant changes to the system will be difficult because it affects so many people and makes up a substantial share of our economy. the important cost drivers of high prescription drug spending are: craig hanna, director of public policy cori e. uccello, senior health fellow members of the prescription drug work group are jeffrey adams, maaa, asa, co chairperson; susan pantely, maaa, fsa, co chairperson; karen bender, maaa, asa; jason gomberg, maaa, fsa; james gutterman, maaa, fsa; audrey halvorson, maaa, fsa; susan mcquillian, maaa, fsa; rebecca owen, maaa, fsa; and gregory warren, maaa, fsa. 1850 m street nw, suite 300 washington, dc 20036 tel: 202 223 8196 fax: 202 872 1948 webmaster@actuary.org site map | privacy policy | terms of use | ©2025 american academy of actuaries. all rights reserved. any references to current laws, regulations, or practice guidelines are correct as of the date of publication.

an official website of the united states government official websites use .gov a .gov website belongs to an official government organization in the united states. secure .gov websites use https a lock ( lock locked padlock icon ) or https:// means you've safely connected to the .gov website. share sensitive information only on official, secure websites. primary site navigation logged in as: the price of prescription drugs to consumers are soaring to unaffordable levels.1 in seeking root causes, it is enlightening to examine the key role played by pharmacy benefit managers (pbms). they are a major part of the problem. almost by accident, health care in the united sates is largely employer based. employer based health insurance came about during world war ii. in 1942, president franklin roosevelt, trying to control inflation, froze wages. war time businesses were not allowed to increase workers’ pay. in order to compete for workforces, employers began offering generous health care benefits.2 in 1943, the internal revenue service decreed employer based health insurance would be exempt from taxation. this made it cheaper to get health insurance through a job than by any other means. in 1940, about 9% of americans had health insurance. by 2017, employer based health insurance was the most common form of health coverage. about 167 million workers and dependents under the age of 65 had employer based health insurance.3 prescription benefits are usually included with health care insurance. over time these drug benefits have greatly expanded. for large corporations, these drug benefits have come to be managed by companies known as pharmacy benefit managers (pbms).4 pbms were supposed to lower health care costs. due to rebates to pbms this has not been the case. there is a growing belief, shared by the author, that pbms increase drug costs. this has drawn the attention of congress. in 2023, the us house of representatives released an authoritative and insightful report on upward spiraling drug prices. the main findings are:5 pbms affect patients’ health. pbms often require burdensome prior authorization. this causes lengthy delays for approval of prescriptions. patients suffer, and even die, while they wait for ‘authorization’.5 conversely, some patients have to fail to respond to a more expensive drug even if a cheaper alternative exists. this is because the pbm has a financial incentive to compel the more expensive drug. pbms use their market leverage to increase their profits not reduce costs for consumers. pbms control which medications are included on a given health plan’s formulary. drug manufacturers agree to discounts, or pay rebates, in order to get their products placed favorably on formularies. however, the discounts and rebates do not make their way down to the consumer. this substantial amount of money goes to the pbms as profits. drug manufacturers actually raise their prices due to pbms. as pbms demand larger and larger rebates or discounts, manufacturers offset these reductions by raising the “list” price for their drugs. pbms encourage this practice because they receive larger financial rebates (e.g., pbm profits) from more expensive drugs.5 incredibly pbms own their own pharmacies. this ownership creates huge conflicts of interest, hurts competition, and distorts pricing. another key function of pbms is to establish a network of pharmacies where beneficiaries get can their prescriptions. the four largest pbms: cvs, caremark, express scripts, and optum rx own their own pharmacies. this pmb group controls 80 percent of the market. other smaller pbms may own their own pharmacies. pbms “steer” patients to the pharmacies they own or control making it difficult for independent pharmacies to survive. generally, pbms reimburse independent pharmacies at lower rates and add additional fees. these pbm income creating fees can be for network participation or tied to pbm generated metrics such as pharmacy rates of refills, errors, or audit compliance. these retroactive fees sometimes cost an independent pharmacy more to fill a prescription than it is reimbursed. for specialty pharmacies, they accrue fees based on irrelevant metrics.5 there are other ways pbms drive up consumer costs. a ‘list price’ is similar to an automobile sticker price. few car purchasers actually pay list price. higher drug list prices drive up costs, even if patients pay a smaller discounted amount. insurance premiums and copayments are based on list prices. pbms allegedly engage in a number of questionable practices. one of is “spread pricing” in which pbms pay a lower amount to the pharmacist than they report to the health plan sponsor. the pbm pockets the difference. sometimes they get caught. using spread pricing, pbms have overcharged state medicaid programs in ohio, kentucky, illinois, and arkansas more than $415 million. it is difficult to determine the full extent of the impact of these pbms practices; they certainly contribute to constantly increasing us healthcare costs.5 the report concludes greater transparency is necessary to determine the extent of the damage pbms’ tactics are having on patients and the market place. without further insight into pbm practices, it is difficult to determine the extent to which they create profits at the expense of patients and payors. it is essential these studies of pbms be done expeditiously! billionaire mark cuban is taking on high drug prices and the pbms with his company mark cuban cost plus drug company. his company currently offers discount prices on 350 generic drugs. it has about 1.5 million customers. it could begin offering insulin directly to consumers in the near future.6 in july 2023 cuban offered on his website a biosimilar version of the world’s highest grossing drug humira at a 90% discount about $569 vs. the current $6,922. even with major discounts, cuban expects to make a fair profit. most people, especially the elderly, are not used to buying drugs on the internet. if the business model proves profitable, more companies may enter the market generating price lowering competition. a new paradigm in drug pricing may occur as a result of the inflation reduction act of 2022.7 formerly medicare, the largest national purchaser of drugs, could not negotiate prices on behalf of medicare patients and us taxpayers.8 in 2026, medicare will be able to negotiate drug prices with manufacturers without of ‘middle person’ of pbms. this is definitely a step in the right direction. arthur h. gale, md, is a missouri medicine contributing editor. he is a retired internal medicine physician in st. louis. articles from missouri medicine are provided here courtesy of missouri state medical association connect with nlm national library of medicine 8600 rockville pike bethesda, md 20894

health beat discover the latest developments in the most important topics in health care today. aging algorithms and health disparities environmental health firearm violence health equity health it health policy insurance infectious diseases patient safety mental health medical studies resources explore an extensive library, created and curated by ahcj members, to help you cover the health care beat. how i did it tip sheets why this matters analysis state insurance guides health data preservation project on demand webinars data helpful links glossary healthnewsreview criteria freelancers advance your career with ideas, contacts and support from the ahcj freelance network. pitching, reporting and writing running a business tools and apps freelance market guide networking awards, grants & fellowships freelance directory a typical workday training & events network with fellow health care journalists and gain valuable insights you can use every day. webinars fellowships workshops | summits annual conference awards for excellence recognizing the best health reporting in print, broadcast and online media since 2004. mentorship program connecting you with the support and resources you need to thrive in the health journalism field. local ahcj chapters network with your peers and access local resources by joining or starting a local chapter. about ahcj learn how we’re setting new standards for health care reporting and how you can be a part of it. history principles & policies board of directors & committees staff contributors advocacy commitment to diversity center for excellence in health care journalism a supporting non profit organization for ahcj governance & financials current supporters • share: photo by tbel abuseridze via unsplash imagine having to pay almost $10,240 for 90 14 mg pills of teriflunomide, a generic prescription drug for patients with multiple sclerosis. now imagine if the same strength of that 90 pill supply cost only $40.55 at a wegmans pharmacy, $40.05 at shoprite, less than $80 at a walmart or rite aid pharmacy and as little as $28.40 at the mark cuban cost plus drug company. this egregious example of how the u.s. health insurance system drives up prescription drug prices comes from a lawsuit filed feb. 5 against the pharmaceutical company johnson & johnson (j&j) and against j&j’s employee benefits committee. the lawsuit has nothing to do with j&j’s role as a maker of pharmaceuticals, reporters bob herman and ed silverman of stat explained in this story: “a sweeping new lawsuit against j&j asks: are employers liable if they overpay for drugs.” instead, the case focuses on j&j as an employer that buys health benefits and prescription drugs for its workers and their family members. the lawsuit also shows how j&j may be liable for violating the federal employee retirement income security act (erisa) of 1974. erisa requires employers’ health plans to protect the interests of employees and families enrolled in those plans. j&j has over 100,000 workers worldwide and provides many of them and its retirees in the united states with health care and prescription drug benefits, the complaint says. “the case could have sweeping ramiﬁcations, potentially opening the doors for any large, self insured employer to face legal action,” under erisa, herman and silverman reported. and the nation’s largest pharmacy benefit managers and employee benefits consulting ﬁrms that employers pay to manage health and drug benefits could be named in similar lawsuits, experts told herman and silverman. this case is important for health care reporters for many reasons. first, the lawsuit highlights the power of journalism because it includes multiple mentions of a 4,000 word stat investigation that herman wrote in june. in that article, herman explained that the nation’s largest employers pay consulting ﬁrms to get the best deals possible from pbms and to ensure that these middlemen are not ripping them off with unfair contracts. “but a largely hidden ﬂow of money between major consulting conglomerates and pbms compromises that relationship, a stat investigation shows,” herman wrote. “some consulting ﬁrms often are getting paid more   a lot more   by the pbms and health insurance carriers that they are supposed to scrutinize than by companies they are supposed to be looking out for.” in that same article, herman explained that the united states spent over $633 billion on prescription drugs in 2022, adding that the conflicts of interest he cited cause employers to spend unknown billions of dollars for employee benefit consultants and pbms, he added. second, the lawsuit alleges that by mismanaging j&j’s prescription drug program, the defendants cost the company’s benefit plans and its employees millions in higher payments for prescription drugs, higher premiums, higher deductibles, higher coinsurance, higher copays, and resulted in lower wages or limited wage growth. when employers pay more for health care and pharmacy benefits, workers’ take home pay declines and job losses ensue, as zack cooper, ph.d., an associate professor of public health and of economics at yale university, testified in june to the u.s. senate finance committee. in january, caitlin owens at axios reported on a study in jama network open that showed how the rising cost of health insurance premiums has led to wage stagnation. “families with workplace health insurance may have missed out on $125,000 in earnings over the past three decades as a result of rising premiums eating into their pay, according to a new jama network open study,” owens wrote. see this data deep dive for more on how high and rising health insurance costs lead to lower wages and increased disparities. the lawsuit was filed in the u.s. district court in new jersey on behalf of the plaintiff, ann lewandowski, a j&j employee working as a health policy and advocacy director on leave due to a dispute regarding a reasonable accommodation for a medical condition, the complaint explains. specifically, the lawsuit charges that j&j and its benefits committee mismanaged the prescription drug benefits provided to j&j workers and violated the fiduciary responsibilities employers have to workers. under erisa, employers have a fiduciary responsibility to manage benefits plans solely in the interest of workers and family members, the u.s. department of labor says. the lawsuit against j&j and its benefits committee is the ﬁrst to involve plan members suing their employer for breach of ﬁduciary duty, according to a benefit consultant herman and silverman quoted. reporting on the j&j lawsuit for the wall street journal, melanie evans and anna wilde mathews quoted elizabeth mitchell, chief executive of the purchaser business group on health (pbgh), in san francisco, a coalition of employers. “this is the first suit of its kind that we’re aware of,” mitchell said. “it definitely will not be the last.” for the past year or so, pbgh has been offered educational sessions to its employer members to explain the potential legal liability involved in providing health and drug benefits to workers, mitchell added. j&j didn’t do enough to get a good deal on prescription drugs, and the employees overpaid for some generic drugs designated as specialty medications by millions of dollars, evans and mathews reported. “the lawsuit asks j&j to make good on losses to the employees’ health plan from alleged mismanagement, but doesn’t stipulate a sum,” they wrote. like j&j, most u.s. employers contract with pbms to manage workers’ prescription drug benefits, a practice health policy experts, lawmakers and others believe is partly responsible for the nation’s high drug prices, herman and silverman reported. the lawsuit alleges that j&j contracts with express scripts, the pbm division of the health insurer cigna, and with the benefits consulting company aon. j&j allowed its selection of a pbm “to be guided or managed by a broker with a potential conﬂict of interest,” the lawsuit adds. an analysis of the prices that j&j and the benefits committee agreed to reveals “a staggering markup from prices charged to comparable plans by other traditional pbms,” the lawsuit says. such high prices “exceed the prices that any prudent fiduciary would agree to pay,” it adds. employee benefits consultants sometimes require pbms to pay anywhere from $1 to $5 for every prescription that an employee, family member or retiree fills under an employer’s contract, herman and silverman reported. in exchange, the consultants will recommend the employer choose that pbm, a fact that may not be disclosed to the employer, they added. “because it receives payment, the consulting ﬁrm also may not closely scrutinize the pbm contract, which allows the pbm to proﬁt more on certain drugs,” they wrote. joseph burns joseph burns is ahcj’s health beat leader for health policy. he’s an independent journalist based in brewster, mass., who has covered health care, health policy and the business of care since 1991. share: tags: pitching, reporting and writing running a business tools and apps freelance market guide awards, grants & fellowships networking freelancer directory a typical workday history board of directors & committees staff contributors center for excellence in health care journalism advocacy commitment to diversity governance & financials current supporters © 2025 ahcj terms of service & privacy policy

an official website of the united states government here’s how you know the .gov means it’s official. federal government websites often end in .gov or .mil. before sharing sensitive information, make sure you’re on a federal government site. the site is secure. the https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely. we enforce federal competition and consumer protection laws that prevent anticompetitive, deceptive, and unfair business practices. view enforcement find legal resources and guidance to understand your business responsibilities and comply with the law. browse legal resources view all competition matters blog posts we work to advance government policies that protect consumers and promote competition. view policy find legal resources and guidance to understand your business responsibilities and comply with the law. browse legal resources view all technology blog posts learn more about your rights as a consumer and how to spot and avoid scams. find the resources you need to understand how consumer protection law impacts your business. visit militaryconsumer.gov visit consumer.gov visit competition counts competition guidance view news and events view more events sign up for the latest news learn about the ftc's notable video game cases and what our agency is doing to keep the public safe. explore refund statistics including where refunds were sent and the dollar amounts refunded with this visualization. our mission is protecting the public from deceptive or unfair business practices and from unfair methods of competition through law enforcement, advocacy, research, and education. learn more about the ftc andrew n. ferguson is chairman of the federal trade commission. chairman andrew n. ferguson looking for legal documents or records? search the legal library instead. looking for legal documents or records? search the legal library instead. tags: today, the federal trade commission brought action against the three largest prescription drug benefit managers (pbms) caremark rx, express scripts (esi), and optumrx and their affiliated group purchasing organizations (gpos) for engaging in anticompetitive and unfair rebating practices that have artificially inflated the list price of insulin drugs, impaired patients’ access to lower list price products, and shifted the cost of high insulin list prices to vulnerable patients. the ftc’s administrative complaint alleges that cvs health’s caremark, cigna’s esi, and united health group’s optum, and their respective gpos zinc health services, ascent health services, and emisar pharma services have abused their economic power by rigging pharmaceutical supply chain competition in their favor, forcing patients to pay more for life saving medication. according to the complaint, these pbms, known as the big three, together administer about 80% of all prescriptions in the united states. the ftc alleges that the three pbms created a perverse drug rebate system that prioritizes high rebates from drug manufacturers, leading to artificially inflated insulin list prices. the complaint charges that even when lower list price insulins became available that could have been more affordable for vulnerable patients, the pbms systemically excluded them in favor of high list price, highly rebated insulin products. these strategies have allowed the pbms and gpos to line their pockets while certain patients are forced to pay higher out of pocket costs for insulin medication, the ftc’s complaint alleges. “millions of americans with diabetes need insulin to survive, yet for many of these vulnerable patients, their insulin drug costs have skyrocketed over the past decade thanks in part to powerful pbms and their greed,” said rahul rao, deputy director of the ftc’s bureau of competition. “caremark, esi, and optum as medication gatekeepers have extracted millions of dollars off the backs of patients who need life saving medications. the ftc’s administrative action seeks to put an end to the big three pbms’ exploitative conduct and marks an important step in fixing a broken system a fix that could ripple beyond the insulin market and restore healthy competition to drive down drug prices for consumers.” insulin medications used to be affordable. in 1999, the average list price of humalog a brand name insulin medication manufactured by eli lilly was only $21. however, the complaint alleges that the pbms’ chase the rebate strategy has led to skyrocketing list prices of insulin medications. by 2017, the list price of humalog soared to more than $274 a staggering increase of over 1,200%. while pbm respondents collected billions in rebates and associated fees according to the complaint, by 2019 one out of every four insulin patients was unable to afford their medication. the ftc’s bureau of competition makes clear in a statement issued today that the pbms are not the only potentially culpable actors   the bureau also remains deeply troubled by the role drug manufacturers like eli lilly, novo nordisk, and sanofi play in driving up list prices of life saving medications like insulin. indeed, all drug manufacturers should be on notice that their participation in the type of conduct challenged here raises serious concerns, and that the bureau of competition may recommend suing drug manufacturers in any future enforcement actions. the pbms’ financial incentives are tied to a drug’s list price, also known as the wholesale acquisition cost. pbms generate a portion of their revenue through drug rebates and fees, which are based on a percentage of a drug’s list price. pbms, through their gpos, negotiate rebate and fee rates with drug manufacturers. as the complaint alleges, insulin products with higher list prices generate higher rebates and fees for the pbms and gpos, even though the pbms and gpos do not provide drug manufacturers with any additional services in exchange. the complaint further alleges that pbms keep hundreds of millions of dollars in rebates and fees each year and use rebates to attract clients. pbms’ clients are payers, such as employers, labor unions, and health insurers. payers contract with pbms for pharmacy benefit management services, including creating and administering drug formularies lists of prescription drugs covered by a health plan. insulin list prices started rising in 2012 with the pbms’ creation of exclusionary drug formularies, the ftc’s complaint alleges. before 2012, formularies used to be more open, covering many drugs. according to the complaint, that changed when the pbms, leveraging their size, began threatening to exclude certain drugs from the formulary to extract higher rebates from drug manufacturers in exchange for favorable formulary placement. securing formulary coverage was critical for drug manufacturers to access patients with commercial health insurance, the ftc alleges. competition usually leads to lower prices as sellers try to win business. but in the upside down insulin market, manufacturers driven by the big three pbms’ hunger for rebates increased list prices to provide the larger rebates and fees necessary to compete for formulary access, the ftc’s complaint alleges. according to the complaint, one novo nordisk vice president said that pbms were “addicted to rebates.” while pbms’ rebate pressures continued, insulin list prices soared. for example, the list price of novolog u 100, an insulin medication manufactured by novo nordisk, more than doubled from $122.59 in 2012 to $289.36 in 2018. the complaint alleges that even when low list price insulins became available, the pbms systematically excluded them in favor of identical high list price, highly rebated versions. as described in the complaint, one pbm vice president acknowledged that this strategy allowed the big three to continue to “drink down the tasty … rebates” on high list price, highly rebated insulins. according to the complaint, as insulin list prices escalated, the pbms collected rebates that, in principle, should have significantly reduced the cost of insulin drugs for patients at the pharmacy counter. certain vulnerable patients, such as patients with deductibles and coinsurance, often must pay the unrebated higher list price and do not benefit from rebates at the point of sale. indeed, they may pay more out of pocket for their insulin drugs than the entire net cost of the drug to the commercial payer. caremark, esi, and optum knew that escalating insulin list prices and exclusion of low list price insulins from formularies hurt vulnerable patients yet continued to pursue and incentivize strategies that shifted the burden of high list prices to patients, the ftc’s complaint alleges. caremark, esi, and optum and their respective gpos engaged in unfair methods of competition and unfair acts or practices under section 5 of the ftc act by incentivizing manufacturers to inflate insulin list prices, restricting patients’ access to more affordable insulins on drug formularies, and shifting the cost of high list price insulins to vulnerable patient populations, the ftc’s complaint alleges. the commission vote to file an administrative complaint was 3 0 2, with commissioners melissa holyoak and andrew n. ferguson recused. note: the commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the commission that a proceeding is in the public interest. the issuance of the administrative complaint marks the beginning of a proceeding in which the allegations will be tried in a formal hearing before an administrative law judge. the health care division of the ftc’s bureau of competition was responsible for this matter.
newsletter who is driving up drug costs for millions of people? by reed abelson and rebecca robbins you probably already know some of the reasons prescription drugs are so expensive. drugmakers charge as much as the market will bear. health insurers and the government haven’t reined in prices. but there’s another reason: middlemen known as pharmacy benefit managers, or p.b.m.s. your employer or a government insurance program like medicare hires these companies to negotiate a price with drugmakers and to pay pharmacies. p.b.m.s are supposed to save money by haggling favorable terms with those businesses in exchange for sending them large numbers of patients. but in their quest for higher profits, they are quietly driving up prescription drug costs. your pharmacy benefit manager is often invisible to you unless you’re having trouble filling a prescription. (you probably rely on one of the big three: cvs health’s caremark, cigna’s express scripts or unitedhealth group’s optum rx.) we spent the past year trying to understand them. today, we published a story about these companies, how they affect drug spending and how they amassed so much control with so little transparency. here’s what we learned. fees paid by drug manufacturers to p.b.m.s or their associated g.p.o.s. 2018 $3.8 billion 2019 $4.8 2020 $5.5 2021 $6.7 2022 $7.6 2018 $3.8 billion 2019 $4.8 2020 $5.5 2021 $6.7 2022 $7.6 source: nephron research by ella koeze employers and governments hire p.b.m.s because they need someone to handle the intricacies of paying for prescription drugs. say your doctor prescribes a drug like eliquis to prevent you from having a heart attack. she’ll send the prescription to your pharmacy, where you’ll pick it up. behind the scenes, your pharmacy benefit manager is handling several tasks. it likely negotiated a price with eliquis’s manufacturer. it helped determine how much you’ll have to pay out of pocket for the medicine.