Shareholders voted in August to approve health insurer Cigna’s $67 billion acquisition of Express Scripts, the country’s largest pharmacy benefit manager. The deal still needs the go-ahead from government antitrust regulators.
But what does Express Scripts do, what even is a pharmacy benefits manager … and why should you care?
Pharmacy benefits managers, or PBMs, get paid to be the ultimate middlemen. They sit at the center of the pharmaceutical industry, playing a role in almost every transaction as pills travel to your pocket.
PBMs aren’t federally regulated, but the three biggest ones in the U.S. — Express Scripts, CVS Caremark, and OptumRX — influence more than 80 percent of employer-sponsored prescription drug coverage.
They act as intermediaries between insurers, drug companies, pharmacies, and you. PBMs process insurance claims, determine which drugs will be covered and by how much, and set the prices that pharmacies and customers pay.
Theoretically, they’re negotiating discounts for everyone — but they’re also making profits for themselves.
PBMs say their involvement helps keep drug prices competitive. And while drug manufacturers are ultimately responsible for deciding how much a drug will cost, former PBM and pharma employees, pharmacists, consumer protection groups, and even the Department of Health and Human Services have alleged that PBM’s practices contribute to soaring pill costs.
VICE News explains what exactly PBMs do in the drug industry, and how that role may be changing.
Illustration and animation by Grace Shin. Motion design by Kris Cave. Editing by Alex Stockton.