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There have been scrutiny of PBMs recently, because of their lack of transparency and unknown methods of price setting

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The United States pharmaceutical company operates on a free market model. They were originally designed to process pharmacy claims, but they now evolved into big players in thr industry who influence drug pricing.

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The UK regulates pharmaceutical pricing through direct negotiations. They have an organization called the National Health Service (NHS) which takes care of the root cause of high medication costs.

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How do Pharmacy Benefit Managers influence drug pricing in free market vs government-regulated Models?

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How do Pharmacy Benefit Managers influence drug pricing in free market vs government-regulated Models?

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medicines are more affordable, competitive bidding for generic and patented drugs ensures cost savings and maintains accessibility; however, strict cost effectiveness assessments reduce immediate access to new treatments (Naci & Forrest, 2023)

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The UK regulates pharmaceutical pricing through direct negotiations to prevent the PBMs from setting the drug price. In contrast to the US's practices, PBMs in the UK have very little influence over the formulary because of the cost-effective assessments (Naci & Forrest, 2023).

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In the UK, the NHS deals directly with manufacturers, limiting PBM influence and preventing them from inflating costs through rebate-driven pricing (Naci and Forrest, 2023)

In the US, the PBMs set the prices themselves through negotiations with manufacturers as well, but in this case, the costs are not guaranteed to be affordable; rather, they fluctuate (Shephard, 2020). In the case when the prices could be brought down for generic medications, the brand name can play a role in increasing the price of those medications due to how PBMs strategize. (Miller, 2025)

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In addition to the transparency regulation, spread pricing has been banned in some states because PBMs usually charge insurers more than they pay pharmacies. Rebate reform efforts are also being proposed. Policy makers proposed passing the rebates directly to patients to reduce the out-of-pocket costs. (Ginder-Vogel 2024)

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PBMs have faced scrutiny due to their lack of transparency in pricing (Shephard 2024), and as a result, some states have enacted reporting requirements forcing PBMs to disclose their pricing structures (Cantrell 2024).

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In addition to the NHS negotiating prices, the cost-effectiveness assessment regulates whether certain medications should be covered to prioritize essential treatments and ensure controlled spending. Name brand manufacturers are required to pay rebates to the government, unlike in the case of the free-market model, where rebates are paid to the PBMs. (Naci & Forrest, 2023)

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PBMs are now one of the major players in the pharmaceutical industry, a big leap from their original position as claims specialists. Currently, they are making so much profit, most times at the expense of patients. The higher the price of a drug, the higher percentage of the drug's sale price they receive. This creates a situation where they are forced to choose between more money and affordability for patients.

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Some states have introduced legislation to regulate PBM pricing in order to increase affordability (Cantrell, 2024). Experts say that if PBMs are more transparent in their practice and enact "direct price control", drug costs could be lowered. (Ginder-Vogel)

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The Evolution and Future of Pharmacy Benefits Managers - School of Pharmacy

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Alumni Brett Eberle, Nancy Gilbride, and Pat Cory weigh in on the news-making pharmacy benefit management industry’s trends.

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Rising Drug Prices and Shortages Are Fueled in Part by the Very Reform Mechanism Intended to Curtail Them

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Pharmacy Benefit Managers (PBMs) have evolved from relatively obscure cost-saving entities into powerful industry players with significant influence over drug pricing and access. Their business practices and profit-driven models have led to inflated drug costs, restricted access to medications, and increased financial burdens for patients and employers.

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Pros: Access to drugs is flexible, in the sense that formulary management (Glinder vogel 2024) and The potenial for lower drug costs through market competition. (Cantrell 2024)

Cons: Higher drug price due to PBM rebate negotiations which increase list prices instead of lowering patient costs. (Shephard 2020)

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Pros: Drug prices are controlled because the National Health Service (NHS) constantly negotiate with pharmaceutical companies to maintain low prices. This is also why medications are generally more affordable and accessible in the UK, especially for vulnerabile populations. (Naci & Forrest 2023)

Cons: Price restricts market driven competition, in turn slowing down innovation. Additionally, the strict cost-effectiveness assessments limit the availability of some new and or expensive medications. (Naci & Forrest 2023)