New Hope Podcast: The Hidden Role of PBMs in America's Drug Pricing Crisis

The healthcare landscape in America continues to be shaped by forces that often remain invisible to patients. One of the most significant yet least understood components is the role of Pharmacy Benefit Managers (PBMs) and their impact on medication access and affordability. In our latest Hope Podcast episode, Dr. Maddie Feldman, a rheumatologist and vice president of advocacy at CSRO, provides an illuminating deep dive into how PBMs have evolved from administrative entities into powerful decision-makers that often prioritize profits over patient care.

Dr. Feldman explains how PBMs originally emerged in the 1990s as entities designed to manage the growing expense of prescription medications. Insurance companies, seeking to separate pharmacy benefits from medical benefits, created a system where PBMs would handle prescriptions and create formularies—lists of drugs covered by insurance plans. What began as a seemingly reasonable administrative solution has transformed into a complex web of profit-driven decisions that directly impact patient access to medications, particularly high-cost specialty drugs that treat chronic conditions like bleeding disorders and autoimmune diseases.

The conversation reveals how PBMs have contributed to rising drug prices through a counterintuitive mechanism: they often prefer higher-priced medications on formularies because these drugs provide larger rebates and kickbacks. This practice, protected by a "safe harbor" exemption from anti-kickback statutes, has incentivized drug manufacturers to raise list prices while offering substantial rebates to PBMs. Dr. Feldman aptly describes this as similar to buying a $500 dress at 50% off rather than a $100 dress at 50% off and claiming you "saved more money," when in reality you spent more. This pharmaceutical pricing dynamic has driven costs upward while PBMs promote their "savings" to clients.

Perhaps most concerning is the vertical integration that has occurred in recent years, with the "big three" PBMs now controlling approximately 80-85% of all prescriptions in the United States. This concentration of power has created what Dr. Feldman describes as having "the judge, the jury, and the executioner all in the same company," where entities control the insurance, the pharmacy benefit, the specialty pharmacies that dispense medications, and increasingly, even the manufacturing of certain drugs.

The human cost of these business practices emerges in powerful stories shared during the episode. We hear about patients being forced to use more expensive brand-name medications when cheaper generics are available, medications being "slow-walked" through approval processes to steer patients toward more profitable alternatives, and the breakdown of community-based specialty pharmacy care in favor of mail-order systems that often result in medication waste, improper handling, or delayed access. Most disturbingly, these decisions can have life-threatening consequences, as illustrated by the story of a young man who died from an asthma attack after being unable to afford his inhaler when it was suddenly moved to a higher formulary tier.

While PBM reform legislation faces significant challenges, bipartisan efforts like the "People Before Monopolies" bill introduced in both chambers of Congress offer potential solutions, including requiring PBMs to divest from pharmacy ownership to reduce conflicts of interest. Dr. Feldman emphasizes that effective reform requires not just new policies but enforcement mechanisms with real consequences—such as exclusion from Medicare participation—rather than fines that amount to mere "mosquito bites" for these highly profitable entities.

​The conversation concludes with a call to action for patients, providers, and advocates to share their stories and speak up about PBM practices that have disrupted care. As Dr. Feldman powerfully states, the current system has "middlemen making medical decisions with no liability for the choices," fundamentally disrupting the doctor-patient relationship. Only through collective advocacy and clear communication about these complex issues can meaningful change occur to restore patient access and affordability in our healthcare system.