Recently, The New York Times conducted an investigation into the root cause of escalating drug prices and deemed that pharmacy benefit managers (PBMs) played an outsized role. While drug companies, insurers, and government inefficiencies often get the blame, PBMs, particularly the big 3, are a significant but less visible part of the problem. Managing benefits for over 200 million Americans, PBMs often put their profits ahead of patients and employers. Here are some of the key takeaways from the article:

1. PBMs steer patients toward pricier drugs: PBMs often direct patients to use more expensive medications instead of cheaper, equally effective alternatives.

2. PBMs markup the price of drugs: They use a tactic called spread pricing where they charge employers far above the wholesale price of drugs, pocketing the difference.

3. PBMs use rebates to their advantage, not to the advantage of employers or patients: PBMs negotiate higher sticker prices for drugs to secure larger rebates, benefiting themselves while patients' out-of-pocket costs increase.

4. PBMs push brand-name drugs over generics: Even when cheaper generics are available, PBMs push patients to use brand-name drugs that are more profitable for them.

5. PBMs charge exorbitant prices for generics: PBMs overcharge for generic drugs, sometimes marking up prices by thousands of dollars compared to the wholesale cost.

6. PBMs restrict pharmacy choices: By forcing patients to use specific pharmacies, often owned by the PBMs themselves, they reduce competition and keep prices high.

These are just some of the ways that PBMs maximize their profits at the expense of patients, employers, and taxpayers, leading to inflated drug prices across the healthcare system. Rightway’s transparent PBM model starkly contrasts the harmful practices described by the New York Times. 

Rightway earns revenue by lowering costs for employers and their teams and focuses on making their people healthier.

"A PBM needs to be 100% financially aligned and take care of members. Anything else is the industry giving you the legacy runaround."

-Jordan Feldman, Co-Founder and CEO of Rightway

Our aligned model gets every prescription to its lowest net cost and passes 100% of rebates back to plan sponsors. We drive members to the highest-value therapies and channels and proactively engage them in proprietary cost-saving programs, all while delivering the best member experience in healthcare.

To dive deeper into how PBMs are inflating drug costs and the impact on patients and employers, read the full New York Times article here. 

To learn more about how Rightway’s transparent PBM model is lowering costs for innovative employers, read our latest annual report.