Pharmacy benefit managers – the middlemen who negotiate drug purchases for insurers and large buyers – are coming under growing scrutiny and criticism both in Connecticut and nationwide for their role in the sharp rise of prescription drugs. The third-party companies, called PBMs for short, originally processed claims for pharmacies, but now are hired by Medicare, Medicaid and commercial health plans to manage pharmaceutical benefits. Their reach is broad: they choose what drugs are covered by insurance; negotiate purchasing deals with drug makers; determine co-pays for consumers; decide which pharmacies will be included in prescription plans; and decide how much pharmacies will be reimbursed for the drugs they sell. The growing legions of PBM critics, who include state Comptroller Kevin Lembo, pharmacists and their trade and service organizations, say that the industry is helping drive the unrelenting rise in prescription drug prices and insurance premiums.
PBMs, Lembo’s office and state pharmacists say, use a variety of tactics to capture cash from consumers, payers and pharmacies. One is spread pricing, where they pay the pharmacy less for a prescription than a payer gives them, sometimes even forcing the pharmacist to take a loss.