PBM Reform Necessary for Access to Medicare Part D Drugs

Investigation and reform for pharmacy benefit manager (PBM) reimbursement practices in Medicare Part D plans is necessary to ensure beneficiaries’ access to generic drugs, according to a study published in JAMA Health Forum.¹ Researchers identified large markups that beneficiaries were responsible for paying, highlighting results of the study that support the need for policy changes.

“Generic drugs represent 90% of prescriptions filled in the US,” wrote the authors. “Prior research suggests that, for certain generic drugs, PBMs provide unjustifiably high point-of-sale reimbursement to pharmacies. For instance, while generic imatinib costs $126 per 30-day supply, PBMs reimbursed at an average of $3780, or 30 times [the] acquisition costs.”

PBMs have been under fire as many pharmacy industry advocates and professionals seek federal reform that will put an end to predatory PBM practices. The largest PBMs in the industry control prescriptions for just under 80% of all drugs on the market.² It is also known that their reimbursement practices directly impact the development, access, and use of all prescription drugs in the US.³

Researchers conducted a cross-sectional study analyzing Medicare Part D claims from 2021 for the 50 generic drugs with the highest expenditures. | image credit: neirfy / stock.adobe.com

With 53 million Medicare beneficiaries enrolled in Part D plans,⁴ PBM reimbursement practices have a notable impact on patients’ access to specific drugs. And with generics accounting for 90% of all US prescriptions,¹ any reimbursement practice designed to increase patients’ out-of-pocket costs can have a detrimental impact on overall access.

READ MORE: Hospital-Pharmacy Relationship Drives Generic Drug Use

“Part D sponsors provided excessive point-of-sale reimbursements to pharmacies for certain generic drugs compared with acquisition costs,” wrote authors of a previous study published in JAMA.⁵ “Findings are concerning because generics represent over 90% of dispensed prescriptions, and excessive reimbursements result in increased patient out-of-pocket costs. Further investigation of the consequences associated with generic drug reimbursement practices by Part D sponsors is warranted.”

With previous research and understanding of PBM practices in mind, researchers of the current study wanted to better understand how reimbursement impacted patient costs. “We evaluated whether these reimbursement practices result in increased out-of-pocket costs for Medicare Part D beneficiaries,” they wrote.¹ To do this, investigators conducted a cross-sectional study analyzing Medicare Part D claims from 2021 for the 50 generic drugs with the highest expenditures.

“We evaluated claims filled by beneficiaries enrolled in stand-alone prescription drug plans (PDPs) offered by the top 6 Part D sponsors, which account for 90% of stand-alone Part D enrollment,” continued the authors. “For each claim, we calculated the total reimbursement and patient liability. Patient liability was the sum of patient payment amount and other true out-of-pocket costs (payments made by third-party payers, including state pharmacy assistance programs or charities).”

Using the National Average Drug Acquisition Cost, researchers then compared total reimbursement and patient liability with drug acquisition costs.

First, they presented their findings regarding a PDP plan administered by Elixir Insurance and owned by Rite Aid Corporation. This plan reimbursed generics at a mean of $22.46 over acquisition cost. More importantly, patient liability exceeded acquisition costs for all Part D sponsors aside from Humana.

“In this cross-sectional study, the large markups paid by Part D sponsors to pharmacies for selected generic drugs resulted in Medicare beneficiaries being liable for hundreds of dollars above product acquisition cost when using their Part D insurance to fill generic prescriptions,” they continued.¹

Indeed, researchers discovered 13 products that were given extreme reimbursements, accounting for 23.8% of spending and 60.8% of patient cost-sharing above acquisition costs. Rite Aid was most commonly responsible for excessive markups as 9 products that the company reimbursed for came with markups exceeding $100.

Similar to previous research, common PBM practices in reimbursement and their excessive markups for Part D plans were significantly prominent in this study. With ongoing work to introduce policy changes and enforce PBM reform, studies like this will continue to support the evidence necessary to finally enact change. As beneficiaries continue to struggle with access to generics, and pharmacies with reimbursement, federal reform may be the best way of steering fairness within health care onto the appropriate path.

“The results support the passage of legislation to investigate and reform generic reimbursement in Medicare Part D to ensure Medicare beneficiaries access to generic products,” concluded authors of the study.¹ “This is critical to avoid more drastic policy solutions with important unintended consequences, such as eliminating generics from insurance coverage, as some groups have proposed to protect patients from over-reimbursement practices.”

READ MORE: Low Reimbursement, Coverage Restrictions Hinder Access to Vaccines

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References

1. Hernandez I, Gabriel N, Pathak Y, et al. Overpayment for generic drugs under Medicare Part D. JAMA Health Forum. 2025;6(2):e250012. doi:10.1001/jamahealthforum.2025.0012

2. FTC releases interim staff report on prescription drug middlemen. Federal Trade Commission. July 8, 2024. Accessed May 28, 2025. https://www.ftc.gov/news-events/news/press-releases/2024/07/ftc-releases-interim-staff-report-prescription-drug-middlemen

3. Bruen B, Docteur E, Lopert R, et al. The Impact of reimbursement policies and practices on healthcare technology innovation. US Department of Health & Human Services; 2016. Accessed May 28, 2025. https://aspe.hhs.gov/sites/default/files/private/pdf/188741/ImpactofReimbursementonInnovation.pdf

4. Cubanski J. A current snapshot of the Medicare Part D prescription drug benefit. KFF. October 9, 2024. Accessed May 28, 2025. https://www.kff.org/medicare/issue-brief/a-current-snapshot-of-the-medicare-part-d-prescription-drug-benefit/

5. Hernandez I, Gabriel N, Kaltenboeck A, et al. Reimbursement to pharmacies for generic drugs by Medicare Part D sponsors. JAMA. 2023;330(24):2390–2392. doi:10.1001/jama.2023.21481