Pharmacy Benefit Managers:

Early Results on Ventures With Drug Manufacturers

HEHS-96-45: Published: Nov 9, 1995. Publicly Released: Nov 9, 1995.

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Pursuant to a congressional request, GAO reviewed mergers between pharmacy benefit managers (PBM) and pharmaceutical manufacturers, focusing on: (1) PBM role in the health care industry; (2) the mergers' objectives and effect on competition; and (3) the extent to which PBM have given preference to their manufacturer partners' drugs.

GAO found that: (1) drug manufacturers have allied with PBM to help maintain their profits in an increasingly competitive marketplace; (2) PBM help health plan sponsors administer prescription drug benefits and help them contain their overall drug costs; (3) manufacturers rely on their PBM partners to develop new programs for treating specific diseases and increase the market share for their drugs; (4) critics of PBM alliances are concerned that the companies involved could act to restrict competition among manufacturers for inclusion on PBM formularies; (5) variations exist in the extent to which PBM have given preferences to their manufacturer partners' drugs; and (6) the Federal Trade Commission monitors PBM alliances to help ensure that PBM maintain competitive processes that allow other manufacturers to compete for low-cost designation for their drugs on PBM formularies.

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