Get the Facts
How Different Kinds of “Transparency” Impacts
Prescription Drug Costs

Fact: Employers, unions, and public programs – not pharmacy benefit managers (PBMs) – determine what level of “transparency” they want in their drug benefits.

Transparency means different things to different clients. To some, it means a PBM passing through 100% of the rebates and discounts they negotiate.

Employers, unions, and public programs – not PBMs – determine what level of “transparency” they want in their drug benefits. Transparency means different things to different clients. To some, it means a PBM passing through 100% of the rebates and discounts they negotiate to the plan sponsor.

Others view hiring a PBM like buying a car – they want to know the total cost, not the input costs of each tire or muffler. Either way, it’s up to the plan sponsor to choose what level of transparency it wants and which PBM can deliver on that goal.

  • According to the Federal Trade Commission, there is a type of transparency that would increase costs for consumers:  any mandate that makes PBMs and clients publicly disclose the terms of their agreements.  This would reveal to drug makers and drugstores the negotiating and pricing strategies of their competitors, enabling them to collude against plans and PBMs and keep costs artificially high.

  • PBMs are highly competitive. If one PBM doesn’t give an employer, union, or government program what they want, another one will.
  • Employers’ top concern is reducing drug costs, not contracting issues, such as “transparency” of payments to drugstores (9%) or rebates to pharmacy benefit managers (4%).

FTC: Mandatory PBM Disclosure Requirements Unnecessary and Costly

FTC staff has examined proposed state regulations imposing PBM disclosure requirements and raised concerns that such mandates may prevent plan sponsors from negotiating the level of disclosure that they deem useful and raise plan sponsors’ costs of providing pharmacy benefits.

Survey: Employers Prefer Private Sector Solutions

By more than a two-to-one margin, employers think private companies are better able than the federal government to manage prescription drug benefits. Seventy percent think the private sector is better equipped than government to manage pharmacy benefits.

FTC: PBM Marketplace is Competitive

Vigorous competition in the marketplace for PBMs is more likely to arrive at an optimal level of transparency than regulation of those terms.