How do PBMs take advantage of the difference between specialty & non-specialty drugs?

Between 1990 and the 2000s, the number of specialty drugs has grown from 30 to over 500.
How do PBMs take advantage of the differences between specialty and non-specialty drugs when it comes to pricing?

Specialty and non-specialty drugs differ significantly in terms of cost, usage, and distribution. PBMs may take advantage of these differences in various ways to maximize their profits, sometimes at the expense of patients and plan sponsors. Here are a few examples of how PBMs might exploit these differences:

1. Rebates & Discounts:

PBMs often negotiate rebates and discounts with drug manufacturers based on the volume of specialty drugs they manage. While these savings could be passed on to patients and plan sponsors, PBMs sometimes retain a portion of or even the entire rebate, resulting in higher drug costs for the end-users.

2. Formulary Management:
PBMs may favor certain specialty drugs over others on their formulary based on financial incentives,rather than clinical efficacy or patient needs. This practice can lead to higher costs for patients and plan sponsors, as they may end up paying for more expensive medications that don’t necessarily provide the best outcomes.

3. Dispensing & Distribution:
Specialty drugs often require specialized handling, storage, and distribution, which can result in higher costs for patients and plan sponsors. PBMs may capitalize on these requirements by charging additional fees for these services or by directing patients to use their own specialty pharmacies, which can charge higher prices.

4. Limited Networks:
PBMs may contract with a limited network of specialty pharmacies, restricting patient choice and access to affordable medications. This can result in higher out-of-pocket costs for patients and reduced transparency for plan sponsors regarding drug pricing and quality.

To ensure that your organization and its employees get the most value from a PBM, it is essential to understand these potential pitfalls and work against them. Advocate for transparency in rebate and discount processes, scrutinize formulary management decisions, and ensure that your PBM is not taking advantage of specialty drug dispensing and distribution requirements.

By staying informed and vigilant, you can help ensure that your PBM serves the best interests of your organization and its employees, providing affordable access to the right medications at the right time.

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