GAO Studies PBM-Obtained Rebates

In 1995, pharmacy benefit managers used in US states operating the Federal Employees Health Benefits Program obtained manufacturer discounts of $107 million, or 21.2% of total pharmacy savings made for the Program by the PBMs, the General Accounting Office reports. The FEHBP uses Medco for mail-order pharmacy and PCS for retail business.

$264 million, or 52.3% of the savings, came from retail and mail-order pharmacy, with $72 million saved from maximum allowable cost pricing for generics and about $10 million from concurrent and retrospective drug utilization review.

The GAO says the new 20% retail-only co-payment produced a major shift to mail-order. In the first five months of 1996, the total amount paid to retail pharmacies by PCS for prescriptions dispensed to Program members affected by the co-payment fell about $95 million, or 36%, against the like, year-earlier period.