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      5 facts to know about PBMs

       

      There are many misconceptions about the role pharmacy benefit managers (PBMs) like CVS Caremark play in health care.

      PBMs are fighting on behalf of payors to protect their ability to choose the benefit plans that work for their members. We are one of the few players in the drug supply chain that is laser focused on driving down costs for our clients and members. We negotiate drug discounts and encourage competition in order to help improve patient adoption of lower-cost therapeutic alternatives, thereby lowering prescription drug costs. 

      • Myth 1: PBMs drive up drug costs

      • Fact: CVS Caremark brings down the cost of medication for patients

      The facts

      • The average out-of-pocket cost for a member’s 30-day supply of medication is less than $8. This is a 15% decrease in brand name drug costs from 2017 to 2021.1
      • The average member out-of-pocket cost for a 30-day supply of insulin is less than $25.1
      • Our insulin costs have decreased every year for eight years in a row.1

      • Myth 2: PBM profit margins are higher than big drug companies

      • Fact: Pharma margins far outpace top 3 PBMs

      The facts

      • PBMs “are the only market-based check on drug pricing that exists today…the average EBIT (earnings before interest and taxes) margins of the top six U.S. pharmaceutical companies is 37%, nearly 8 to 10 times higher than PBM margins, which are closer to 3% to 5%.”2

      Barclays | U.S. Health Care Facilities & Managed Care

      Pharma EBIT margins are Bloomberg consensus
      Source: Bloomberg, Barclays Research estimates

      The chart titled 'Pharma vs PBM 2024E EBIT Margins' compares the 2024 estimated EBIT margins for pharmaceutical companies and PBMs. EBIT Margins for Pharmaceutical Companies: AMGN: 45%; ABBV: 44%; MRK: 37%; PFE: 37%; LLY: 33%; JNJ: 32%; Average for Pharma: 30%. EBIT Margins for PBMs: Optum Rx: 4%; Caremark: 3%; Evernorth: 3%. The chart titled 'Pharma vs Big 3 PBM 2024E EBIT ($bn)' compares the 2024 estimated EBIT values for pharmaceutical companies and the Big 3 PBMs. EBIT Projections for Pharmaceutical Companies: JNJ: $30.0 billion; ABBV: $27.0 billion; MRK: $24.9 billion; PFE: $25.0 billion; LLY: $23.5 billion. EBIT Projections for the Big 3 PBMs: Optum Rx: $20.6 billion; Caremark: $20.0 billion; Evernorth: $18.9 billion. This detailed description ensures that users who rely on screen readers can understand the data presented in the charts.

      • Myth 3: PBMs take advantage of Medicare and America's seniors

      • Fact: "Delinking" proposals increase drug costs for Medicare beneficiaries and taxpayers

      The facts

      • 'Delinking’ would hand Big Pharma a $32 billion dollar windfall, at the expense of hardworking Americans, including seniors.3
      • The increase in premiums in the commercial market would be $1 billion–$3 billion greater than in Part D, or $5 billion–$16 billion in total.4

      • Myth 4: PBMs use rebates to artificially inflate drug costs

      • Fact: 99% of all CVS Caremark rebates are passed back to our clients, equaling $53 billion

      The facts

      • For Medicare Part D plans, we pass back nearly 100% of rebates.
      • Manufacturers raised non-rebated list prices 2x faster than rebated list prices.
      • Only 7.4% of claims have rebates, but brands account for 82% of drug spend.
      • The Federal Trade Commission (FTC) says PBMs use rebates to inflate profits, but this is contradicted by the complaint’s admission that PBMs pass back 90% to 98% of rebate dollars to their clients, i.e., employer, union and Medicare Part D plans.5
      • Since April 1, 2024, Humira biosimilars have seen a 96% adoption. This has led to more than $1.3B in employer, union and health plan gross savings and $0 out-of-pocket cost for most members.

      90%

      of drugs dispensed at CVS Caremark are generic, typically without rebates

      <$25

      is the average CVS Caremark member
out-of-pocket cost for a 30-day supply of insulin

      • Myth 5: PBMs hurt independent pharmacies

      • Fact: 40% of the 65K retail pharmacies in the CVS Caremark networks are independent pharmacies

      The facts

      • CVS Caremark provides 25% higher reimbursement for some generics at independent pharmacies compared to chains.
      • Ohio, Arkansas and Florida have conducted audits comparing reimbursement rates for independent and PBM-owned pharmacies. These audits consistently found that independent pharmacies receive higher or similar prices compared to PBM-owned pharmacies.6

       

      05222025