Toward transparent PBMs

A federal appeals court upheld a Maine law that requires pharmaceutical benefits managers (PBMs) to disclose to their clients the rebates and incentives they receive from drug manufacturers. Historically, PBMs have made money by collecting these fees and have not passed them on to their employer and insurance company clients. That’s already been starting to change as more PBMs tout transparency and customers begin to demand it.

Leading PBMs Medco and Caremark have strong mail order businesses, which are strongly profitable and have good growth potential. Expect them to shift more of their emphasis into that line of business and away from rebate maximization.

November 9, 2005

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