Make PBMs Disappear, Not Just Transparent

  • by: Robert Goldberg |
  • 07/14/2017

There have been many articles arguing that the way to reduce drug prices – especially out of pocket costs to patients – is to ensure transparency on rebates. 

For instance, an excellent article in Forbes by my colleague Grace Marie Turner entitled PRICE TRANSPARENCY IS CRITICAL TO DRUG PRICING SOLUTIONS, suggests that  forcing PBMs to disclose drug rebates would help ensure rebates would go directly to consumers and stop PBMs from requiring consumers to pay their share of their prescription drug bills based upon the retail price of the drug.

The fact is, there are already a lot of transparent PBM models.  For example, Medicare Part D requires rebate pass through and transparency. 

And yet, Medicare doesn't realize that the PBMs are socking away about $14 billion in rebates and so-called performance based fees -- esssentialy rebates in the form of claw backs after a drug is sold.  Interestingly, a study published by the pro-PBM trade group, The Coalition for Affordable Drugs revealed just how much of the rebate actually goes to Medicare under the so-called transparent or pass through model.  CMS reports a lot less than the PBMs collect.  

2014 DIR                                    Amount in billions

Rebates reported by PBM.                        $31.7
Rebates reported Medicare by PBM         $17.4
Amount PBMs didn't report to Medicare  $14.3

Where did that $14.3 billion go? 

When Adam Fein of DrugChannels asked Glenn Gliese, the lead author of the report, about the 'discrepancy', Gliese replied he "cannot really comment on what CMS is doing."

I bet.

If $14.3 billion in undisclosed rebate dollars doesn’t highlight the hollow promise of transparency, nothing will. 

The problem is NOT transparency.  The problem is the rebates themselves.  The problem is the existence and growth of PBMs that continually exclude retail community pharmacies that know the needs of their customers and the PBMs increasing use of one size fits all benefit designs and restrictive access to control costs and increase rebates (and prices).  

Transparent PBMs still force the sickest patients to fail first.  And what the don't collect in rebates, the make up for in fees and higher base prices. (Remember, PBMs set the price of the drugs for pharmacies, health plans, patients, pharma.) The so-called pass through of rebates does not change that practice.  PBMs need to eliminate cost sharing, fail first, prior authorization and steering patients to drugs that benefit their bottom line.   Instead of making PBMs transparent we need to make them disappear.  And we need an anti-PBM business model to deliver the drugs that work best for patients at the lowest out of pocket cost.  


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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