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Oversight Hearing of Senate Committee

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Oversight Hearing of the Senate Committee on Business, Professions and Economic Development: Pharmacy Benefit Managers 101

By Jon Perrone


It is familiar news that the United States spends more on prescription drug prices than other
countries, and that drug costs are consuming a greater portion of our overall health care dollars.2 Unfortunately, unwinding these costs is an inexact science because so many factors contribute to our tangled system. This paper will seek to explain the role of one player in this web, pharmacy benefit managers (PBMs).

PBMs are a key player in the prescription-drug supply chain, linking pharmacies, drug manufacturers, health plans, and consumers. According to the Pharmaceutical Care Management Association (PCMA), the PBM trade group, PBMs process prescriptions for the vast majority of Americans.3 While PCMA estimates there are over 80 PBMs nationwide, only three firms, Express Scripts, CVSHealth, and OptumRx, constitute about 75 percent of the market.4

This background paper is intended to present a better understanding of PBMs’ core and allied
businesses, how they profit, and to what extent they are currently regulated.


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About the AuthorJon Perrone