When Insurers Acquire Pharmacy Benefit Managers, Medicare Members Could Pay More

As legislators craft reforms for the pharmacy benefit managers (PBMs) who determine insurance coverage for prescription drugs, a new study by LDI Senior Fellow Abby Alpert and colleagues provides strong evidence to inform those proposals.

“That’s a conflict of interest,” Alpert said. “The PBM has an incentive to potentially disadvantage the rival insurers, which could involve passing through a smaller share of rebates or charging them higher administrative fees.”

Indeed, Medicare Part D insurers that continued to work with rival insurers’ PBMs had double-digit hikes in their premiums — implying higher costs, the researchers found. In addition, Alpert said, “We did not find that any cost savings for insurers that integrated with a PBM were passed through to enrollees as lower premiums.”