In an environment of inflated list prices for prescription drugs, in the United States, payers and patients rely upon significant negotiated discounts in order to afford and access medicines. These discounts are primarily achieved through the work of pharmacy benefit managers (PBMs). This report examines how traditional PBM contracts introduce significant, hidden financial risks to health plan sponsors through delayed, retrospective discount reconciliations. By modeling a $1 million drug spend, this study shows that minor 1% variances in expected manufacturer rebates and pricing benchmarks can swing a plan's net costs by 2% to 3%. When scaled nationally, these backend gaps and group purchasing organization (GPO) fees expose the U.S. healthcare system to billions of dollars in unexpected costs, including an estimated $27.4 billion in the commercial market alone. Ultimately, the report concludes that paper-based discount guarantees are routinely eroded by the complex timing gaps and lack of transparency inherent in modern PBM billing structures.
Read More