7593250-shredded-money-a-100-dollar-bill-and-a-syringe-concept-or-metaphor-for-cost-of-drugs-health-wasting-stock-photoHere a most interesting overview of prescription benefit managers (PBMs), which drug companies fear now, but consumer advocates might grow to fear, which appeared in InsulinNation, by Jim Cahill, a senior writer for Insulin Nation and Type 2 Nation. Before turning to writing, he was a lawyer in government and private practice who focused on consumer protection and regulatory law. He can be contacted at jcahill@epscomm.com. Here are some excerpts:

PBMs are organizations commonly understood to be the “middle men” in the chain of distribution of prescription drugs and medical devices from the manufacturers to the places where those products are dispensed or purchased through an insurance carrier or a prescription purchase plan. They are also considered the organizations to which health insurance carriers outsource claims administration. The Medicare program relies on private insurance carriers, under long-term national and regional contracts, to pay out benefits and make available purchase of prescription drugs at discount for Part C and often deeper discount for Part D beneficiaries. The carriers in turn rely upon PBMs to secure long-term commercial agreements with drug manufacturers to ensure that there will be an adequate supply of products for their policy holders and for the people they insure under their Medicare contracts, at prices predictable enough that the carriers can plan to stay in business. Some PBMs also manage prescription drug claims and pricing agreements for labor union benefit plans and workers’ compensation insurance carriers.

PBMs maintain that their role in managing the U.S. prescription drug distribution business is to make it more efficient by reducing the transaction costs associated with each step from the factory to the drug store counter. It would make sense that de-fragmenting the pipeline from prescription drug manufacturer to patient ought to make things more efficient and keep costs under control. Moreover, it would stand to reason that building capacity within the business of delivering health care to assure the best, and the most economical, utilization of therapeutic drugs will bring better outcomes. But when patients see their out-of-pocket prescription costs and their insurance premiums rising faster than the overall cost of living, or they are being steered by their insurance carriers to a particular brand or outlet to keep their copayments reasonable, they begin to wonder what the point of it all is.

Read more: Are PBMs Driving Up The Price of Insulin?

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