PUTT Blog | State Legislatures are Back in Session. Let’s Brush Up on Rebuttals to Common PBM Claims

The following is an excerpt from a white paper we recently published in response to marketing claims made by Blue Cross Blue Shield in Kansas. For a copy of the complete paper, please contact us here: 

No doubt you’ve heard PCMA and the Big Insurance lobby proclaiming PBM “value” and “savings” in ads, legislative testimony, and opinion articles. Recent federal investigations, including a January 2025 Federal Trade Commission report, reveal that the largest PBMs generated $7.3 billion in revenue from markups on specialty generic drugs between 2017 and 2022, with some markups reaching hundreds or thousands of percent. Academic research demonstrates that PBM rebate strategies correlate with higher list prices, directly increasing out-of-pocket costs for patients in high-deductible plans or those paying coinsurance.

So, other than PBMs’ own industry-sponsored economic models, can any of their claims be substantiated?

The Evidence Gap

PBM industry communications and some health plan statements frequently assert that PBMs:

• Save an average of $1,040 per person per year

• Deliver $145 billion in value to the healthcare system

These figures appear regularly in legislative testimony, public comments, and advocacy materials opposing PBM regulation.

These estimates originate from an economic model developed for PBM industry stakeholders and promoted by the Pharmaceutical Care Management Association (PCMA). The model:

• Relies on proprietary inputs including rebate sizes, retention rates, and discount levels that are not publicly disclosed

• Assumes specific levels of efficiency, rebate pass-through, and discount sharing without independent verification

• Has not been validated against audited claims data from government agencies or neutral research institutions

No independent government accounting demonstrates that patients actually experience $1,040 less in annual out-of-pocket spending due to PBM activity. No audited federal dataset confirms $145 billion in empirically measured savings. These figures represent industry claims rather than verified outcomes.

Rebates and List Prices

Academic research from the USC Schaeffer Center found that higher rebates correlate with higher list prices. Specifically, a one-dollar increase in rebates is associated with approximately a $1.17 increase in a drug's list price. This finding has significant implications: the same rebate mechanism promoted as generating "savings" appears to drive list price inflation for brand and specialty drugs.

Patient’s drug costs are calculated on list prices rather than net prices including:

• Patients who are uninsured

• Those in the deductible phase of high-deductible health plans

• Patients paying percentage-based coinsurance

For these patients, higher list prices directly increase what they pay at the pharmacy counter, even when their plan sponsor receives substantial rebates that lower the net cost.

Net prices after rebates may be lower for plan sponsors, but:

• Net prices and rebate amounts are not publicly available

• Employers and state agencies typically cannot independently confirm that net savings align with PBM marketing claims

• Rebates are often used to reduce aggregate premiums or plan costs rather than to lower individual patients' out-of-pocket charges at the point of sale

Even when PBMs secure rebates that lower net costs for an employer’s plan, there is no guarantee—absent statutory requirements—that patients pay less at the pharmacy counter, particularly for high-cost drugs with large rebates and high list prices.

Transparency Problems

PBMs and health plans sometimes characterize their arrangements as "transparent," yet independent reporting and federal analyses consistently describe rebate and fee flows as opaque.

Contracts between PBMs and plan sponsors frequently contain confidentiality provisions that prevent:

• Employers from seeing detailed rebate, discount, and spread pricing information

• Employees covered under these plans from accessing information about how their benefits are structured

• Pharmacists from disclosing actual drug spend when asked by employers

Even when PBMs contractually agree to "pass through" some portion of rebates to plans:

• Neither employers nor patients can verify how much negotiated value PBMs retain

• The share that offsets premiums versus reducing point-of-sale cost-sharing remains unclear

• No public, audited, industry-wide dataset shows the portion of rebates that reaches patients at the pharmacy counter

This opacity creates an accountability gap. Employers paying for drug benefits, state agencies managing public programs, and patients making cost-sharing payments cannot determine whether the system operates efficiently or whether intermediaries capture value that should flow to patients and purchasers.

The Big Picture

While pharmacy benefit managers perform some important intermediary functions in the prescription drug system - like claims processing - statements made by insurers, their affiliated PBMs and lobbying arms demonstrate a significant gap between aspirational claims and verifiable outcomes. From savings claims that lack independent verification, to academic research correlating rebate increases with higher list prices, and an almost complete lack of transparency - PBM claims of value and savings are demonstrably refutable.