Faced with what appears to be an endless increase in prescription drug costs, employers need a clear view into the prices they pay for their employees’ medications.

Pharmacy Benefit Managers (PBMs) are having a moment; albeit, not a very good one. A lack of clarity around their profits from spread pricing, rebate retention, and formulary placement has resulted in bad press and increasing pressure for transparency from state and federal legislators, industry organizations, and health care providers.

The claim made by many PBMs that their practices result in lower prescription drug costs may seem reasonable at first blush, but begins to fade as you consider that: (1) the 2022 Segal Health Plan Cost Trend Survey projects that out-patient prescription costs will increase 8.5% in 2022, inclusive of specialty medications; and (2) a report by the Berkeley Research Group found that in 2020 more than half of total spending on brand medicines went to the supply chain, including PBMs, and not drug manufacturers.

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