Grit Daily – April 30, 2020
Why are drug costs so high in America? If you ask Bernie Sanders, he will tell you that it’s due to the greed of the pharmaceutical industry. If you remember when “pharma bro” Martin Shkreli, former CEO of Turing Pharmaceuticals, made the price of the life saving drug Daraprim 5,000% higher overnight, you may agree with this assessment. But, there is more to the story, and it has to do with Pharmacy Benefit Managers (PBM’s).
Within the healthcare industry, there are pharmaceutical manufacturers, pharmacists, insurance companies, and Managed Care Organizations (MCO) for Medicaid, but there is one more player that few outside of the industry discuss—the pharmacy benefit manager, or PBM. A PBM’s original role was to negotiate lower drug costs between drug manufacturers and insurance companies, with the goal of passing those savings on to the consumer. Instead, the rise of PBMs, who have amassed great power with little oversight, has led to higher drug prices with a lack of price transparency. Small, neighborhood pharmacies are going out of business, and many of them attribute it to being underpaid through reimbursements managed by these pharmacy benefit managers.
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