Pharmacy Benefit Managers:

Early Results on Ventures With Drug Manufacturers

T-HEHS-96-85: Published: Feb 7, 1996. Publicly Released: Feb 7, 1996.

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GAO discussed the role of pharmacy benefit managers (PBM) in the health care market, focusing on the effects of mergers between pharmaceutical manufacturers and PBM. GAO found that: (1) PBM help health insurers control their drug costs by encouraging the use of formularies, creating pharmacy networks, negotiating rebates with drug manufacturers, substituting generic drugs, and conducting drug utilization reviews; (2) drug manufacturers merge with PBM to increase their profits and market share and develop disease management programs; (3) critics believe that continued mergers between drug manufacturers and PBM will reduce market competition and hinder new PBM from entering the drug market; (4) the Federal Trade Commission (FTC) has taken action against some PBM-manufacturer mergers and developed safeguards to ensure that drug formularies and their cost designations and market competition remain fair; and (5) determining whether PBM adhere to pro-competition safeguards will be difficult, since it will require access to PBM proprietary information.

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