Pharmacy Benefit Managers:
Early Results on Ventures With Drug Manufacturers
T-HEHS-96-85, Feb 7, 1996
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.