PBMs Practice Rate Pumping and Spread Pricing

The "rebate pumping" and "spread pricing" referenced in the article, "Rebates to pharmacy benefit managers are a hidden contributor to high drug prices," definitely deserves scrutiny as the author suggests. 

But state Medicaid agencies don't need to wait for this. They can and should be asking their PBMs right now if these practices are keeping treatments from making it on their formulary.  With all the attention on the opioid epidemic, the treatments related to medication assisted treatment come to mind.  Are there better treatments, with better rebate offers, branded and/or generic, that are not getting preferred formulary positions because PBMs are using these questionable practices?

These practices seem to suggest the market can't function properly anymore. Take a simple example - A new therapy comes along to compete with an existing one. It has no market share yet, so the company offers a deeper discount or rebate. PBMs don't let them onto formulary though because a lesser rebate from the market leader is better for them. Even if the therapy is incrementally better for patients. So how does the new therapy get to break in with PBMs standing in the way with their own profit motivations essentially walling patients off from trying the new therapy?  

Read the full article here: 

Rebates to pharmacy benefit managers are a hidden contributor to high drug prices

Greater transparency about the rebates that drug makers give pharmacy benefit managers could help control rising drug costs.

https://www.statnews.com/2016/11/28/rebates-pharmacy-benefit-managers-contribute-high-drug-prices/

This reflects my own personal perspectives, not those of any Connect 4 Strategies’ clients.