An Interesting Read About PBMs...
If Pharmacy Benefit Managers Raise Drug Prices, Then Why Are They Needed?
By: Arthur H. Gale, MD, is a Missouri Medicine Contributing Editor. He is a retired Internal Medicine physician in St. Louis.
The price of prescription drugs to consumers are soaring to unaffordable levels. In seeking root causes, it is enlightening to examine the key role played by pharmacy benefit managers (PBMS). They are a major part of the problem.
How Did Pharmacy Benefit Managers Come About?
Almost by accident, health care in the United Sates is largely employer-based. Employer-based health insurance came about during World War II. In 1942, President Franklin Roosevelt, trying to control inflation, froze wages. War time businesses were not allowed to increase workers’ pay. In order to compete for workforces, employers began offering generous health care benefits.
In 1943, the Internal Revenue Service decreed employer-based health insurance would be exempt from taxation. This made it cheaper to get health insurance through a job than by any other means. In 1940, about 9% of Americans had health insurance. By 2017, employer-based health insurance was the most common form of health coverage. About 167 million workers and dependents under the age of 65 had employer-based health insurance.
Prescription benefits are usually included with health care insurance. Over time these drug benefits have greatly expanded. For large corporations, these drug benefits have come to be managed by companies known as Pharmacy Benefit Managers (PBMs).
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