By NextBestFitPublic drug formulary and direct pricing
The public payer negotiates prices directly with manufacturers and pays pharmacies a transparent dispensing fee.
Public formulary and direct pricing replace PBMs.
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Public drug formulary and direct pricing
Concrete changes if chosen
What would actually have to change in law, agencies, payment rules, or systems.
- Create a national drug formulary and negotiating agency
- Pay pharmacies a published dispensing fee plus acquisition cost
- End PBM contracts for covered drugs
Effects
Each effect has its own page: the evidence, the case that it is or isn't a real cost, and whom it affects.
What it fixes
- Pharmacy benefit managers profit from opaque drug pricing
Direct public negotiation with manufacturers and a transparent pharmacy dispensing fee end spread pricing, rebate games, and pharmacy clawbacks. A national formulary simplifies prescribing.
What it creates or worsens
- Adds paperwork, coordination, or complexity
Direct public drug administration requires the agency to handle formulary and claims work.
- Limits choice or applies one rule to every setting
A shared formulary leaves fewer brand choices for some patients.
Who's affected
Who gains
- People with unaffordable deductibles or coinsurance
- Pharmacy benefit managers profit from opaque drug pricing: List-price-based coinsurance exposes them to higher drug prices.
- Community pharmacies
- Pharmacy benefit managers profit from opaque drug pricing: PBM-owned pharmacies dominate specialty drugs.
- Employers
- Pharmacy benefit managers profit from opaque drug pricing: Opaque spread pricing hides prescription benefit margins.
- People with ongoing or specialist care needs
- Pharmacy benefit managers profit from opaque drug pricing: Direct public negotiation with manufacturers and a transparent pharmacy dispensing fee end spread pricing, rebate games, and pharmacy clawbacks. A national formulary simplifies prescribing.
Who loses
- Pharmacy benefit managers and their pharmacies
- Pharmacy benefit managers profit from opaque drug pricing: Rebates and opaque pricing generate revenue for benefit managers and their insurer parents.
- Health insurers, brokers, and their shareholders
- Pharmacy benefit managers profit from opaque drug pricing: Rebates and opaque pricing generate revenue for benefit managers and their insurer parents.
- Drug and device makers
- Pharmacy benefit managers profit from opaque drug pricing: Rebates buy formulary placement for their products.
Other ways to soften the losses
- Transition program
Where it has been tried
- UK, Canada (pCPA), Australia (PBS): National drug purchasing without PBM intermediaries.