Former DOJ Economist Dennis Carlton Releases Empirical Analysis of PBM Data Contradicting FTC Findings

Dennis W. Carlton, Ph.D., David McDaniel Keller Professor of Economics Emeritus at the University of Chicago Booth School of Business and former chief economist at the U.S. Department of Justice, released preliminary findings of his research into PBMs. The analysis was based on the same data submitted to the FTC by Express Scripts, CVS Caremark, and OptumRx. After analyzing all the data, the findings refute the recently published FTC interim report and confirm prior government and academic studies showing how PBMs benefit plan sponsors and patients. This is the largest release of data to a third-party researcher from the three PBMs. Key highlights of Carlton’s study include:

• The average pass-through rate for rebates and fees has increased over time and was close to 100% by 2020 and 2021.
• The average retail pharmacy spread, which is the difference between the amount that plan sponsors pay to PBMs for a prescription and the amount retained by PBMs is below 2%.
• PBM operating margins were below 5% in recent years and were lower in 2022 than they were in 2017.
• The real net price paid by plan sponsors and members for rebated branded drugs declined 13% between 2017-2021 while the real net price paid for non-rebated branded drugs increased 6%.
• Reimbursement rates paid to independent pharmacies are generally higher than the reimbursement rates paid to non-affiliated chain pharmacies, for both non-specialty branded drugs (4% higher for independents) and non-specialty generic drugs (24% higher for independents).