The Relationship Between Pharmacy Benefit Managers(PBMs)and the Cost of Therapies in the U.S. Pharmaceutical Market: A Policy Primer for Clinicians

Publication date: Available online 23 August 2018Source: American Heart JournalAuthor(s): Kevin A. Schulman, Matan DaboraAbstractPharmaceutical benefit managers (PBM’s)are playing an increasingly important role in establishing access to pharmaceutical products for patients. PBM’s set retail prices for pharmaceutical products, negotiate “rebates” from manufacturers based on total sales volume of products, and achieve several types of post-sale price concessions and payments from pharmacies. All of these activities describe a complex flow of funds that has not been transparent to clinicians nor to patients. In this paper, we describe these terms and processes to better understand how pharmaceutical products are financed in the US.In 2016, U.S pharmaceutical manufacturers reported gross pharmaceutical sales of $462 billion and net pharmaceutical sales of $318 billion. The difference between gross and net sales is largely due to the different “payments” from manufacturers to PBM’s and other intermediaries in the marketplace.We examine the flow of funds through the U.S. pharmaceutical distribution system over time using data from the annual reports of 13 major pharmaceutical manufacturers for the period 2011-2016. Overall, we find that net revenues for our sample of firms grew by an average of 2.7% annually between 2011 and 2016, while rebates and other payments increased by 15% annually over the same period.Our examination of the pharmaceutical market reveals the en...

Source: American Heart Journal - August 23, 2018 Category: Cardiology Source Type: research