Examining the Price of Prescription Drugs

Prescription drugs are expensive. Without insurance, consumers would pay even more for medicines that are essential to their health, wellness, and the welfare of their families. While most consumers are familiar with the role that pharmacies and drug companies play in delivering these drugs, many people overlook the role of Pharmacy Benefit Managers (PBMs). By one estimate, 90% of individuals with prescription drug coverage receive benefits through a PBM, and PBMs handle approximately two-thirds of all prescriptions written in the United States.

PBMs serve as middlemen between drug manufacturers, pharmacies, health plan sponsors, and consumers. PBMs do everything from negotiating the prices health plan sponsors pay for drugs to setting the prices pharmacies are reimbursed for dispensing drugs. They also decide which specific drugs are eligible for reimbursement. 

Some examples of PBMs are Express Scripts, Medco and CVS Caremark. Express Scripts and Medco, two of the nation’s largest PBMs, are seeking to merge and form the nation’s largest PBM. If this merger goes forward, the combined company will administer 1.14 billion prescriptions annually, and would handle 41% of all prescriptions administered by PBMs. The merged PBM would be nearly two times larger than its nearest competitor.

Express Scripts and Medco argue that this merger will benefit health plan sponsors, and ultimately consumers. They claim that the combined company’s scale will give it substantial buying power to drive down drug prices. 

Some consumer advocates and competition experts fear this merger will diminish competition and cause drug prices to increase even more. They question whether the projected savings that the PBMs claim will be passed along to health plan sponsors and ultimately consumers. Community pharmacists - in small pharmacies and large chain drug stores alike - raise important concerns about whether they will be able to compete after the merger and continue to provide in-person services and consultations that many people have come to rely on. 

As Chairman of the Senate Judiciary Antitrust Subcommittee, I convened a hearing Tuesday, to examine the effects of this merger on individuals and prescription drug prices. We heard from many witnesses, including two that represent Wisconsin businesses, and gained much insight into this proposed merger.

I will continue working to make sure the potential merger will not hurt consumers so that you are able to receive prescription drugs at a reasonable price ensuring that you and your family are able to afford the care you deserve.