The Hidden Risks of Big Consulting Firms Running Their Own Pharmacy Coalitions

By Brian Uhlig and Scott Conard, MD.

Big consulting firms are increasingly running their own pharmacy coalitions, raising serious concerns about conflicts of interest, transparency, and accountability. While these coalitions claim to lower costs, they often prioritize profits over patient care, leaving employers and employees with inflated expenses and limited oversight.

The Conflict of Interest Problem

When consultants also own or manage pharmacy benefit managers (PBMs), they profit at multiple stages—negotiating contracts, setting drug prices, and managing claims. This creates incentives to maximize revenue rather than secure the best deals for plan sponsors. Employers may unknowingly be paying excessive fees while receiving suboptimal healthcare benefits (KFF, 2023)¹.

A study by the Government Accountability Office (GAO) found that PBM-owned coalitions often use spread pricing and opaque rebate structures, making it difficult for employers to understand actual costs (GAO, 2022)². This lack of transparency contributes to rising prescription drug prices, with PBMs pocketing billions in hidden fees (Brookings, 2023)³.

The Need for Transparency

Many PBMs operate with complex rebate structures and hidden fees that obscure true drug costs (Health Affairs, 2023)⁴. Employers should demand:

• Full disclosure of all compensation from PBMs and coalitions.
  
• Engagement with independent consultants who do not receive PBM commissions.
  
• Regular RFPs to compare PBM pricing and performance.
  

How Employers Can Take Action

To protect plan members and control costs, employers should:

• Engage legal counsel to review PBM contracts and financial incentives.
  
• Explore cost-plus PBMs that operate transparently (Commonwealth Fund, 2023)⁵.
  
• Separate pharmacy benefits from health plans for better cost control.
  
• Ensure executive leadership involvement to drive informed decision-making

Potential Benefits—If Managed Properly

Pharmacy coalitions can offer savings, but only with independent oversight and accountability. Employers should:

• Conduct regular contract reviews to ensure promised savings are realized.
  Use data analytics to identify waste and inefficiencies.
  
• Demand performance guarantees to hold PBMs accountable.
  
• Driving Change Through Accountability

Regulators and market forces are pushing for greater scrutiny of PBM practices, particularly regarding the use of tax-exempt and 340B funds (American Journal of Managed Care, 2023)⁶. Employers can accelerate this shift by demanding transparency and prioritizing long-term health outcomes over short-term savings.

The Path Forward

Organizations must challenge the status quo by identifying waste, reinvesting in employee health, and collaborating with transparent partners. By prioritizing value and accountability, employers can ensure that their healthcare dollars serve their employees—not corporate profits.

 
Sources:

1. Kaiser Family Foundation (KFF), 2023. "The Role of PBMs in Rising Prescription Drug Costs."
   
2. Government Accountability Office (GAO), 2022. "PBM Practices and Their Impact on Drug Pricing."
   
3. Brookings Institution, 2023. "The Hidden Costs of PBMs and the Need for Reform."
   
4. Health Affairs, 2023. "PBM Transparency: A Step Toward Lowering Prescription Drug Costs."
   
5. The Commonwealth Fund, 2023. "How Cost-Plus PBMs Could Transform Pharmacy Benefits."
   
6. American Journal of Managed Care, 2023. "340B Program and the Need for PBM Oversight."
   

Written by Rob Thwaites