Drug costs have risen astronomically over the last few decades. Twenty years ago drug spending accounted for just 7% of healthcare spending, but now, many employer groups allocate half of their healthcare spending toward prescription benefits. Since approximately half of Americans take prescription drugs, cost is an issue for both employees and employers.
Given that companies have such tremendous spending power, it would be logical to conclude that employers would be exerting unprecedented pressure on their pharmacy benefit managers, those organizations that exist to reduce prescription drug costs through aggregated buying power and market leverage. So, it may be surprising to learn that the relationships employers have with their PBMs are often their least cost-effective partnerships. Worse, employers aren’t even aware that they’re entering into unfavorable contracts with PBMs.
