Working Paper: NBER ID: w29959
Authors: Zarek C. Brotgoldberg; Catherine Che; Benjamin R. Handel
Abstract: Despite their importance to the supply of prescription drugs, there has been limited research on pharmacy benefit managers (PBMs) and their vertical relationships to insurers and drug manufacturers. This paper provides an overview of the current state of research on this topic, motivates why further research is needed, and discusses promising theoretical and empirical directions for that research.
Keywords: Pharmacy Benefit Managers; Drug Supply; Vertical Relationships; Healthcare Pricing
JEL Codes: I11; I13; L1; L42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| PBMs (L65) | lower drug prices (P22) |
| market power of drug manufacturers (L65) | PBMs (L65) |
| PBMs aggregate demand (I11) | negotiation leverage (C78) |
| vertical mergers between PBMs and insurers (L42) | ambiguous effects on consumer welfare (F61) |
| consolidation of PBMs (G34) | implications for drug innovation (O36) |
| increased formulary exclusions (I13) | decrease in development of new drugs (O39) |