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Pharmacy Benefit Managers: History, Business Practices, Economics, and Policy
T Joseph Mattingly1, David A Hyman2, Ge Bai3
1Department of Pharmacotherapy, University of Utah College of Pharmacy, Salt Lake City.
JAMA Health Forum
|November 3, 2023
Summary
Pharmacy benefit managers (PBMs) are key intermediaries in drug distribution. Policies should boost PBM competition to benefit consumers, not just other industry players.
Area of Science:
- Health Economics
- Pharmaceutical Policy
- Industry Analysis
Background:
- Pharmacy benefit managers (PBMs) are central intermediaries in the pharmaceutical supply chain.
- Their increasing role has led to significant policy scrutiny.
- A systematic description of PBM history, practices, and policy is lacking.
Purpose of the Study:
- To provide a comprehensive overview of the PBM industry.
- To analyze the current policy landscape and its potential impact on PBMs and patient care.
Main Methods:
- Review of historical data, industry practices, and publications.
- Analysis of academic literature, statutes, regulations, court cases, and legislative reforms.
Main Results:
- PBMs have evolved with horizontal/vertical integration and market concentration.
- Key functions include formulary design, utilization management, price negotiation, network formation, and mail order services.
- Criticisms focus on lack of competition, pricing, agency issues, and transparency.
Conclusions:
- PBMs are crucial in pharmaceutical management and distribution.
- Regulation should prioritize enhancing PBM competition to address market failures.
- Policies must serve consumer needs over narrow interests of other market participants.
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