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PBMs


brendanb22
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Anybody have any good industry primers or research on PBM's? Find the market fascinating and one that hasn't changed in quite some time -- clearly an attractive attribute to a value investor, but am curious where more nimble players could potentially poach market share

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There have been a lot of roll ups over the years which have kind of consolidated the industry but now it appears as if the insurers who separated themselves from the PBM's now want them in house again.

 

The CVS thread has some good discussion:

 

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/cvs-cvs-health-corporation/

 

I particularly like one of the later posts by ABM which gave a nice little history of the industry.

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Brendan, I agree that more nimble players can poach market share. 

From my research big industry players have been ripping off clients in a major way and smaller more transparent guys have been taking it.  Rite Aid bought Envision RX whom I thought was particularly well run.  Any idea of any small PBMS that are gaining?

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Outside of getting better prices for employers/insurers, is there much value that these guys really add? It seems very tough to actually see the value they provide as prices are so distorted and there is room for manipulation of what they actually save the consumer. Correct me if I'm wrong as I have little to no experience in the industry.

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The ripoff is my own personal opinion.  There was a WSJ article about how a hospital was being ripped off by a PBM and they were seeing both sides of the transaction.  There is a lot of nontransparency into PBM drug prices and rebates, etc from the customer side which give the PBM room to rip off their customers.  I just remember seeing some small PBM with very transparent models and probably much cheaper pricing taking share quickly.  I am no expert but that is my sense. 

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The ripoff is my own personal opinion.  There was a WSJ article about how a hospital was being ripped off by a PBM and they were seeing both sides of the transaction.  There is a lot of nontransparency into PBM drug prices and rebates, etc from the customer side which give the PBM room to rip off their customers.  I just remember seeing some small PBM with very transparent models and probably much cheaper pricing taking share quickly.  I am no expert but that is my sense.

 

Could you provide some names of the small PBM's?

 

From what I can read, in some circles PBMs have a bad name, but I can't really put my finger on it why this would be justified.

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The ripoff is my own personal opinion.  There was a WSJ article about how a hospital was being ripped off by a PBM and they were seeing both sides of the transaction.  There is a lot of nontransparency into PBM drug prices and rebates, etc from the customer side which give the PBM room to rip off their customers.  I just remember seeing some small PBM with very transparent models and probably much cheaper pricing taking share quickly.  I am no expert but that is my sense.

 

Could you provide some names of the small PBM's?

 

From what I can read, in some circles PBMs have a bad name, but I can't really put my finger on it why this would be justified.

 

I've seen how my Mom got PO'd when Express Scripts dropped a drug from their formulary & refused to provide it for her (this was a year or more ago & I can't remember the drug but it was some kind of antibiotic - she has a stoma with a gastro pouch that gets infected periodically.)

 

They didn't even inform her of a substitute (just a "nope" can't have that any more.)

 

I did some research & we got her Dr. to prescribe a substitute but I found it kind of odd/distressing that they didn't seem to care about outcomes or patient engagement even though their literature says they do.

 

Long customer service waits/runaround won't endear you to them either...

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  • 4 weeks later...

Anybody have any good industry primers or research on PBM's? Find the market fascinating and one that hasn't changed in quite some time -- clearly an attractive attribute to a value investor, but am curious where more nimble players could potentially poach market share

 

Brendan,

 

Just a side note here. The PBMs have been holding their heads low - as far as I have observed - with regard to the political discussions going on pre US Presidential Election about pharma companies making outragious profits on diabetes health care [sanders at that time  especially mentioning Novo Nordisk, Elly Lilly and Sanofi], while everybody knows a part of the total equation for patients is the slice of price ex. sales tax taken by the PBMs.

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  • 3 weeks later...

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