The problem with Spread Pricing with Parmacy Benefit Managers (#PBM s)

This is my opinion on spread pricing in pharmacy (and why it's a bad idea if you are an employer). The article below from Axios.com's Sam Baker illustrates what I've been talking about in my presentations. Namely, the people who are being harmed by increasing prices are both employers and consumers. 

Taking a really simple example, in 2014, the list price for insulin was around $390. The net price was $147. If a pharmacy benefit manager (#PBM) charges 10% (the actual amount varies) of the savings from list to fill, then they made $24.30 (meaning the employer paid the PBM $24.30 for saving them $240.30). In 2019, the list price is $594 and the fill price is $135. Using the same formula, the PBM made $45.90. This DOES NOT INCLUDE ANY #REBATES. The consumer is the ultimate person who pays, either through higher medical premiums, copays, or higher out of pocket maximums. 

If an employer used a pass through PBM (meaning that the PBM charges either a flat per fill rate or flat per employee per month rate), all of those extra savings, including the rebates, goes directly back to the employer/consumer. 

United Healthcare said that all rebates will be going back to employer groups (which is great). Their total profit is still higher overall than when rebates made a difference.

Here's the referenced article:

Eli Lilly says its insulin is getting cheaper

Eli Lilly says it's not making as much money off high-priced insulin as you might think, per the Wall Street Journal (https://www.wsj.com/articles/as-political-scrutiny-mounts-eli-lilly-divulges-new-insulin-pricing-data-11553436000?).

By the numbers: The list price for Humalog, Lilly's insulin, has risen 52% since 2014. It now stands at $594 per month.

? But, in newly released figures, Lilly says most of that increase in list prices has been funneled into pharmacy benefit managers' rebates, not its own bottom line.

? The net price for a month of Humalog — the price after accounting for rebates and discounts — has fallen slightly over the same period. It was $147 in 2014, and is now $135.

Yes, but: This will be cold comfort to the uninsured and people with high deductibles, for whom rising list prices matter a great deal, especially for a drug people depend on to stay alive.