While the Inflation Reduction Act went a long way to reducing out-of-pocket prescription expenditures for Medicare enrollees, Congress has taken one of the biggest prescription drug market distortions – the exemption to the federal anti-kickback statute for drugmaker rebates to insurers – and cemented it in law. One thing we’ve learned in studying prescription drug prices, the more distortions that exist, the greater the likelihood that we all pay more for less.

A new study released by the Oregon State Pharmacy Association, in collaboration with my research firm 3 Axis Advisors, found that drug pricing practices of intermediaries in the prescription drug supply chain – pharmacy benefit managers, or PBMs – are growing health care inequity, threatening access to medicines and incentivizing higher prices at the pharmacy counter.

Our study found that PBMs are reimbursing pharmacies in the state at wildly different rates, and that the majority of drug reimbursements at a typical retail Oregon pharmacy are insufficient to cover their labor and drug acquisition costs. Moreover, our report showed that PBMs have been charging Oregon’s Medicaid program an average of more than $2,900 for a generic multiple sclerosis drug with a manufacturer’s list price of $350.

PBM practices affect us all. These little-known insurance intermediaries have enormous influence over which prescription drugs are prescribed to patients, where patients can obtain those medications and how much they will pay for those medicines at the pharmacy counter.

Without corrective action, this problem of inflated drug prices is going to get much worse.

Antonio Ciaccia and Brian Mayo

Ciaccia is president of 3 Axis Advisors. Mayo is executive director of the Oregon State Pharmacy Association.