WSJ STUDIES PBMs'MAIL-ORDER BUSINESS FOR GENERICS

The Wall Street Journal (WSJ) examinedhow pharmacy benefit managers(PBMs) have managed to grow into "ahugely lucrative place in the foodchain" of prescription drug sales,because they "have figured out how touse mail order to turn generics into abonanza." The 3 largest PBMs—MedcoHealth Solutions, Caremark Rx, andExpress Scripts—reported almost $2billion in combined profits last year.Generics made up more than half ofMedco's mail-order earnings.

According to the WSJ, the PBMs buygeneric drugs in bulk for pennies a pilland then charge employers significantlymore. For example, in a court case inOhio, Medco paid $90 for enough pillsto fill 114 prescriptions for a genericversion of Valium (diazepam) butcharged the Ohio State TeachersRetirement System $1028 for the medicine.Many employers, however, stillconsider the trade-off "a bargain,because [prices of generics are] generallystill much lower than those ofbrand name drugs," the WSJ reports.

The PBMs maintain that the amountthey charge employers is necessary tocover overhead costs and smaller profitmargin losses for branded drugs.Some states have recently consideredlegislation that would require PBMs todisclose the sources of their earnings.