Medicare premiums may go up as rival insurers acquire pharmacy benefit managers, according to a January study published in the American Economic Journal: Applied Economics.
“The PBM has an incentive to potentially disadvantage the rival insurers, which could involve passing through a smaller share of rebates or charging them higher administrative fees,” Abby Alpert, PhD, study author and senior fellow at the Phildelphia-based University of Pennsylvania Leonard Davis Institute, said in a March 10 news release. “That’s a conflict of interest.”
Medicare Part D insurers that still worked with rival competitors’ PBMs saw significant premium hikes, suggesting steeper costs for beneficiaries. For example, as independent Part D PBMs waned, monthly premiums increased $22, or 42%, for enrollees in nonintegrated plans in the wake of UnitedHealth Group’s 2015 deal with Catamaran.
Dr. Alpert added that cost savings for insurers integrated with a PBM did not always translate to reduced premiums, though.
The researchers also measured the share of enrollees insured by companies with their own integrated PBM. In 2010, only 30% of Part D beneficiaries fell into this category, versus 80% by 2018.
Vertical integration, which includes insurers and PBMs merging, has been a hot topic in recent months, even sparking a bill in the U.S. Senate to unwind such mergers.
