Traditional vs transparent Pharmacy Benefit Management companies

An article in Fortune magazine titled “Painful Prescription” (October 28,2013) describes a traditional pharmacy benefit manager (PBM), Express Scripts and a transparent PBM, Envision Pharmaceutical Services. Transparent PBMs charge a fixed fee for processing prescriptions while traditional PBMs make money on the spread between their purchase and selling prices, often profiting from sales of generics, whose prices are not standardized. Clients such as Meridian Health Systems, which discovered the margins charged by Express Scripts because it was both a provider and a user of the company, claim that their costs increased when they switched to Express Scripts. Should companies shift to transparent PBMs, who charge a fixed fee, as a means to reduce overall costs ? Will the purchasing volumes of the large PBMs, along with automation of order filling, suggest that traditional PBMs will end up being the distributors of choice in the long run ? Will the Affordable Care Act’s requirement, that participating PBMs have to declare their manufacturer rebates and margins, reduce margins in this industry ?

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About aviyer2010

Professor
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