[attaboyjon]

Actually the PBMs are a big villain here. They pocket the difference between the retail price of a drug and the discounts they negotiate with the drug makers. They choose the drugs on their formulary based on this spread.

This one of the reasons why you will see prices for drugs like Insulin going up with each manufacturer raising price in lock-step. The drug makers are not competing to sell the consumer insulin, they are competing to get on the formulary of the PBM.

[refurb]

But that's their job! They are supposed to negotiate lower prices. They, in turn, can market their formulary to insurance companies by saying "If you use us, we can offer a lower cost pharmacy benefit."

And if you're a smart insurance company, you do your due diligence and don't negotiate a contract where you have no transparency into the PBMs costs.

[baloneyman]

What "job" is that? There is no reason for these companies to exist. Incentivizing drug companies to raise prices in lockstep... to keep the middlemen happy? That is a very perverse incentive

[xadhominemx]

>There is no reason for these companies to exist.

It is clear you don't know much about PBMs. Maybe try to rephrase your comment as a question.

[attaboyjon]

Well yeah that's the problem. They dont pass the discount on to me. I pay full retail price, and they keep the discount. This is why Express Scripts is a $100 BILLION company. And that's for managing Formularies you say?

Express Scripts Holding Company is the largest pharmacy benefit management (PBM) organization in the United States,[20] with 2013 revenues of $104.62 billion.[21] In 2012 Express Scripts' $29.1 billion acquisition of rival Medco Health Solutions (once the nation's largest PBM) created "a powerhouse in managing prescription drug benefits."

[refurb]

Well yeah that's the problem. They dont pass the discount on to me. I pay full retail price, and they keep the discount. This is why Express Scripts is a $100 BILLION company. And that's for managing Formularies you say?

The discounts are passed through via lower insurance premiums. You don't really see that since your employer pays the premiums.

And yes, ESI is a $100B per year company with $3.4B in net income.[1] A stunning 3.4%. Not that different than a grocery store.

[1]http://financials.morningstar.com/ratios/r.html?t=ESRX

[attaboyjon]

Well no. I pay for it all out of pocket. My deductible is high enough that I pay for all that medication. It's about $6000/year. My insurance premiums are $1400 per month by the way. So no, there's no magical cost saving being passed back to me.