...relatively unknown players the pricing and distribution drugs are also harming consumers.

Pharmacy benefits managers (PBMs) administer prescription drug benefit programs for employers, unions, health plans, and other groups. They act as intermediaries tot roughly 11,000 third-party payers and make decisions regarding drug delivery that affect over 276 million consumers. (1)

PBMs play a major role in the drug-delivery system, but their business practices are increasingly questionable. In litigation emerging across the country, plaintiffs are challenging these practices and seeking compensation for harm to health plan participants.

The pharmaceutical industry is a complex group of entities: ones that manufacture drugs, ones that deliver drugs from manufacturers to consumers, and ones that reimburse consumers and their health plans. Because so many parties are involved, pharmaceutical transactions generally lack the transparency of those in other markets and industries. Standard economic data, such as actual drug prices, is either unclear or simply unavailable. In this environment, PBMs--which possess considerable market power and control drug-cost information--can easily perpetrate fraudulent pricing and other unlawful schemes.

PBMs were created as brokers between health insurers and drug manufacturers to help control drug costs and coverage. As prescription drug prices and choices have increased, health plans have contracted with PBMs to handle drug purchasing and distribution for them. A large PBM may have many separate health plans as its clients. Today, the big four PBMs--Medco, AdvancePCS, Express Scripts, and Caremark RX, Inc.--control the prescription drug benefits of about 210 million people in the United States, about 70 percent of the nation's population. (2)

Traditionally, PBMs were paid administrative tees for managing prescriptions, acting as fiduciaries for health plans with the mission of providing lower drug costs for the plans and their participants. In recent years, however, PBMs have deviated from their...

NOTE: All illustrations and photos have been removed from this article.




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