According to a Health Affairs Scholar paper by Geoffrey Joyce out this month, the answer is ‘yes’. He writes:
Most PBM contracts tie their compensation to a percentage of a drug’s list price, creating a financial incentive to favor high-cost, high-rebate drugs on plan formularies at the expense of lower-cost generics and biosimilars. Furthermore, the PBM industry is highly concentrated and vertically integrated with the country’s largest health insurers, making it even harder to assess PBM performance and profitability. A simple analysis of annual drug spending at different reporting levels provides important insight into where the money goes and where savings could be achieved. We find that simply delinking compensation to the list price of a drug throughout the supply chain could reduce annual drug spending by more than $95b or nearly 15% of net spending without adversely affecting manufacturers’ incentive to innovate.
What about other reforms such as increased transparency around PBM rebates?
…modest reforms aimed at increasing transparency or limiting further consolidation will not alter incentives or substantially reduce drug prices. However, delinking compensation to the list price of a drug throughout the supply chain could mitigate the perverse incentives in the market and be an easy first step in making medicines more affordable.
You can read Dr. Joyce’s full argument here.
