Issue: Pharmacy benefit managers (PBMs) are responsible for negotiating payment rates for a large share of prescription drugs distributed in the U.S. Recently, policymakers have expressed concern that certain PBMs' business practices may not be consistent with public policy goals to improve the value of pharmaceutical spending.
Goal: We sought to explain key controversies related to PBM practices and their roles in driving value in the pharmaceutical market.
Methods: Literature review and feedback from top experts on PBM business practices and potential policy solutions.
Key findings and conclusion: In some cases, PBMs' use of rebates has contributed to high pharmaceutical costs, yet proposed solutions to the rebate controversy--including passing the rebate through to payers or patients--will not on their own reduce overall pharmaceutical spending without other policies that drive toward value. Policymakers seeking to reform pharmaceutical reimbursement beyond the practice of rebates will need to consider these changes in light of the recent mergers between PBMs and insurers and the entry of new market competitors.