Quantifying a Pharmacy Benefit Manager (PBM) Fee-For-Service Business Model

Summary: Using CVS’s 2017 10-K reports to the SEC and its 2017 drug trend report, we convert its PBM segment (a.k.a. Caremark) reseller gross profits business model to a single transparent fee-for-service expressed in terms of dollars per member per year (PMPY).   The following table summarized our results: Our estimated FFS equivalent of $64 […]

CVS’s 2019 Formulary Removals – Negligent Handling Diabetes Test Strip Change

Summary Around the first week in August for the past four years, CVS has made an official announcement of its next year’s formulary changes. It posts these changes on its own websites. But that changed in 2018. During an August 8th 3Q2018 Earning Conference Call,  CVS said that 2019 formulary details would be available around […]

The Problem with CVS’s “Guaranteed Net Cost” PBM Business Model

Summary: Consider this meta:  CVS opaquely is substituting one opaque source of gross profits — guaranteed net cost markup — for another opaque source — retained rebates. The pharmacy benefit manager (PBM) CVS Caremark has offered its self-insured corporate clients an alternative business model called “Guaranteed Net Cost”.  The pricing scheme features 100% pass-through of […]

AbbVie’s Mavyret Drug Pricing: Disruptive to the Pharmacy Benefit Manager Business Model

Summary: AbbVie’s pricing for its new Hepatitis C Virus (HCV) drug Mavyret is disruptive to the current PBM business model because it forces the Big 3 PBMs to consider a drug for inclusion in their national formularies that is aligned with their clients interests — more cost-effective than Harvoni — but not aligned with their […]

Blame Pharmacy Benefit Managers (Not Pharma) For Driving Drug Price Inflation

Summary: We start with a review of the history of the opaque pharmacy benefit manager (PBM) reseller business model. We present our prior estimates of the distribution of PBM gross profits over the past decade showing that they have become dependent today on retained rebates from specialty drugs. Next, we present numbers showing how PBMs […]

Three Phases of the Pharmacy Benefit Manager Business Model

We present the case that there has been three distinct phases of the pharmacy benefit manager (PBM) business model over the past 15 years. Each phase has been demarcated by a major shift in the dominant source of gross profits. These radical shifts in the primary source of gross profits in such a short period […]

Pharmacy Benefit Managers

CURRENT PAPERS ON PBMs A Position Auction Demonstration Project for Lowering Reference + Biosimilar Rx Drug Prices in Medicare Part B  (8/19) Off-Target: Pelosi’s Binding Arbitration Proposal to Reduce Medicare Part D Drug Prices (04/19) Quantifying a Pharmacy Benefit Manager (PBM) Fee-For-Service Business Model   (03/19) CVS’s Negligent Handling of Its 2019 Formulary Change In Coverage […]

Preferred Provider Pharmacy Networks

PREFERRED PROVIDER PHARMACY NETWORKS The CVS-Caremark Merger and the Coming Preferred Provider War (12/06) Medicare Part D and Preferred Provider Pharmacy (04/05) The CVS-Caremark Merger: The Creation of an Elasticity of Demand for Retail Rx (11/06) Contrary to What Wall Street and the FTC Say, The PBM Business Model is Misaligned (11/05) Sins of Omission’: […]