Pharmacy benefit management (PBM) companies have grown exponentially in size, scope, and power over the last several years. They have become enormous entities that wield great power over our healthcare system. But does that mean they are headed to their own demise? Are they too big and too powerful now?
Big merger news aside, the PBM industry was gaining size and power even without bombshell anouncements like the recent Express Scripts and Medco merger plans. This industry was growing and becoming rich and powerful beyond most people’s expectations even if no major mergers happened.
The PBMs that are left standing after this inevitable consolidation continues will grow even further. But at some point, doesn’t their own influence and power make them marked companies? Does the apparent hubris behind the leaders of this industry lead to it’s downfall?
If you had a time machine and went back a few decades, you’d see a PBM industry just sprouting out of nothing. They became a means for insurance companies to outsource payment processing functions for a small fee. It all seemed well enough at the time. Nothing could have foreshadowed the evolution of PBMs into their current incarnation.
But then something happened. As these early PBMs grew, they began to take on more and more roles in the healthcare system. They started negotiating contracts between insurance companies and pharmaceutical makers. They started creating preferred provider networks and tiered copay systems. Mandatory mail order service for maintenance drugs were the brainchild of the PBM industry. And they made handsome profits for themselves every step of the way.
PBMs became more than simple claims processors. They flexed their muscles and drove patients toward one pharmacy over another or to one drug over another. They have real power. And that power has grown exponentially over the years.
But what I’ve noticed recently is that this industry is demonstrating a kind of arrogance or pride that could lead to their downfall. They’ve grown so big, so rich, and so powerful that they no longer operate in the backdrop of healthcare claims processing. They are in the forefront of many people’s minds. They are a force, but a very visible one.
Lately it seems like they are acting in a way that goes even beyond arrogance or pride. It is a form of hubris not often seen by an entire industry. Just look up quotes from some of the CEOs in the PBM industry if you don’t believe me. Their words speak for themselves.
Pride isn’t a bad thing, but in excess it is a destructive force. Pride tends to blind. And the arrogance and pride now demonstrated by the PBM industry may be a precursor to their demise. They are becoming their own worst enemy.
There is no hiding under the radar now for an industry that has individual companies well above the multi-billion dollar size. They can’t simply claim to be the cost containment champions they want to spin to the world when it is easy to look up and find how much money they siphon off the healthcare system every year. And these deals with pharmaceutical companies, even if they are undisclosed, are a damaging fact that leaves the PBM industry exposed to potential failure.
One may not believe that an industry which seemingly is doing so well for itself would be vulnerable at all. After all, look at how the PBM industry has managed to operate over the last decade. They’ve done well for themselves to say the least.
But now people with real power are starting to become aware of the influence and power of PBMs. Lots of press surrounding the industry shows just how rich and powerful they have become and how they look out for their own interests over that of the healthcare system’s need for effective and efficient patient care.
Cost containment is the new buzz phrase for current healthcare policy and procedure determination. Governmental influence on the healthcare system is set to grow in the coming years and our elected leaders will be under great pressure to contain healthcare costs. Politicians want value for every healthcare dollar spent. That is the bottom line now.
In an environment where the government, employers, and families are all looking to control healthcare costs it will be increasingly difficult to justify the added expense of a large and bloated PBM industry. They are just too big and take too much money out of the healthcare system without providing any actual healthcare goods or services to justify their continued existence. They are feasting at the table without contributing to the bounty.
The veil has been lifted. The true nature of the PBM industry is out in the open. And for the healthcare system, those true intentions lead to higher costs and restrictions on patients and providers. PBMs are the only ones that seem to be the winners as a result of their deals and influence. And that fact isn’t going un-noticed.
PBMs are calling all the shots now. The arrogance and might of that industry and it’s leaders is now bordering on hubris. But that is exactly what may lead the industry to its doom. And for an insider who has seen all too often the negative fallout that results from a powerful PBM, it is long overdue for them to be put in their place. The viability and cost effectiveness of our healthcare system depends on it!
The Redheaded Pharmacist