Penn's Ashley Swanson Featured on Marketplace Radio Report

Penn's Ashley Swanson Featured on Marketplace Radio Report

Wharton Health Economist Discusses Controversy Surrounding Pharmacy Benefit Managers

Penn Wharton School Assistant Professor of Health Care Management Ashley Swanson is prominently featured in an American Public Media Marketplace radio and web report about the rising debate over the health care business role played by pharmacy benefit managers (PBMs).


Ashley Swanson, PhD, Wharton School Economist and LDI Senior Fellow

PBMs are middleman companies between insurers and other health care payers and drug manufacturers. By pooling their payer clients' customers together PBMs can negotiate steep drug price discounts.
Power to say 'no'
LDI Senior Fellow Swanson, PhD, noted that "In order to get pharmaceutical manufacturers to cut a deal on price, you have to be able to say no." She explained to Marketplace that the PBMs most powerful tool for doing this was the "formulary," or the list of drugs the PBM agrees to cover. Drugs that are kept off the list can only be acquired when a PBM client's customer pays full retail price -- usually causing sales of that particular drug to decline.

The issue now beginning to dominate the debate over PBMs is the secrecy surrounding every aspect of the deal they hammer out for clients. That secrecy is so tight that the insurers and payer clients don't actually know what the real drug price is or how much of the achieved savings PBMs are diverting to their own profit line.

$19.5 billion in profits
The Marketplace national radio and web story by Senior Health Reporter Dan Gorenstein says the PBM industry chalked up $19.5 billion in profits in 2017 and cites critics who suggest that those profit levels show that the middlemen are responding more strongly to their own interests than to those of their clients.

The Marketplace article also quotes a spokesperson from the Pharmacy Benefit Management Institute who says those profits are justified by PBMs' market expertise.