PBMs' profits are increasing while their revenue sources remain unclear, report says

Between 2017 and 2019, pharmacy benefit managers' gross profit increased by 12 percent despite PBM retention of manufacturer rebates decreasing during this period, according to a report released Dec. 2 by the PBM Accountability Project.

The report showed that the PBM gross profit increased from $25 billion to $28 billion between 2017 and 2019. It also showed that the sources of these profits changed significantly.

During this time, gross profit from administrative fees paid by manufacturers for services provided by PBMs increased 51 percent, from $3.8 billion to $5.7 billion. Gross profit from PBM-owned mail-order and specialty pharmacies increased more than 13 percent, from $8.9 billion to $10.1 billion.

Additionally, gross profit from "other sources" — such as pharmacy fees, fees collected from insurers, spread pricing and other non-administrative fees — increased by about 26 percent, from $8.5 billion to $10.7 billion. These sources account for nearly 40 percent of all PBM gross profit.

The report said PBMs benefit directly from high drug prices, as several revenue sources are linked to drugs' list prices. It also said pricing complexity and lack of transparency prevents patients and insurers from adequately analyzing PBM decisions or drug costs.

"Over time, PBMs have found ways to take advantage of a lack of transparency and oversight to increase their profit," Sally Greenberg, executive director of the National Consumers League, said in a news release. "This report showcases not only the many ways they do this, but also just how much money they’re making from these tactics. We must find policy solutions to bring that money — those savings — back to consumers as intended."

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