Responding to former Scottsdale Councilwoman Suzanne Klapp’s recent editorial criticizing proposed legislation to “de-link” PBM profits from the rebates they negotiate with drug manufacturers. Like most employers, Ms. Klapp has been misled to believe that PBMs can negotiate prescription drug discounts as a percentage of the drug’s artificially inflated list price, keep some (or even all) of the rebates negotiated, and somehow those retained rebates will equal lower costs for consumers at the pharmacy counter.
As a pharmacist and independent pharmacy owner, I can assure Ms. Klapp nothing could be further from the truth. When PBMs compensate themselves for negotiating drug rebates as a percentage of the drug’s retail price, they contribute to the escalation of the drug’s cost.
It’s a perverse incentive: the rebate is baked into next year’s drug price increase and the PBM takes a cut of next year’s increased price. The manufacturer then continues to offset the cost of doing business with the PBM, while the PBM takes more than its fair share and the patient pays the price at the pharmacy counter and in their increased health care premiums.
The lack of transparency is why Ms. Klapp and others are deceived. PBM compensation for managing a patient’s prescription drug benefit should not be linked to the drug price under any circumstances. Delinking PBM compensation from drug price is but a small but critical step to PBM reform, one we hope Senators Sinema and Kelly, and the rest of our Arizona delegation, will support.
Reader reactions, pro or con, are welcomed at AzOpinions@iniusa.org.
