Drawing Back the Curtain on Pharmacy Benefit Managers

Last month, the United States  Supreme Court declined to hear an appeal by Pharmacy Benefit Mangers ("PBMs") offended by California Civil Codes Section 2527's requirement that PBM's make bi-annual reports to pharmacies revealing PBMs' reimbursement rates for pharmaceuticals provided to uninsured customers. PBMs are the ultimate intermediaries between pharmacies and insurers, reimbursing pharmacies for submitted claims at networked rates unavailable to consumers without prescription drug benefits. They represent a highly concentrated powerful industry, one often under some form of ownership alliance with the largest pharmacy chains in the United States.

The battle over Cal. Civil Codes Section 2527 has been epic — with both the California Supreme Court and the 9th Circuit weighing in before the Supreme Court ended it last month.  Lots can and will be said about the first amendment implications of such mandated reporting. What interests me is how both sides wrap themselves in the mantle of protector of California's consumers. The PBM class members maintain that pricing secrecy allows them to drive ever lower networked rates and prevents those outside from using the now-to-be-disclosed information to shift costs to the network. The pharmacies claiming that pricing secrecy allows insurers to play games with the pharmaceutical pricing presented as black box inscrutable to the uninsured.

And which is it? Or, is it both? Like so many fair competition claims purporting to advance consumer welfare, might it be that not all consumers have the same interests?

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