Americans are paying too much for prescription drugs. It is a common, long-standing complaint. And the culprits seem obvious: Drug companies.
Insurers. A dysfunctional federal government. But there is another collection of powerful forces that often escape attention, because they operate in the bowels of the health care system and cloak themselves in such opacity and complexity that many people don’t even realize they exist.
They are called pharmacy benefit managers. And they are driving up drug costs for millions of people, employers and the government. The three largest pharmacy benefit managers, or PBMs, act as middlemen overseeing prescriptions for more than 200 million Americans.
They are owned by huge health care conglomerates — CVS Health, Cigna and UnitedHealth Group — and are hired by employers and governments. The job of the PBMs is to reduce drug costs. Instead, they frequently do the opposite.
They steer patients toward pricier drugs, charge steep markups on what would otherwise be inexpensive medicines and extract billions of dollars in hidden fees, a New York Times investigation found. The PBM negotiates with drug companies, pays pharmacies and helps decide which drugs patients can get at what price. In theory, everyone saves money.
“We’re really, really good at what we do,” Jon Mahrt, president of UnitedHealth’s PBM, Optum Rx, said in an interview. The main lobbying group for the PBMs says that in 2022 they saved their clients and patients $286 bi.
