Even as PBMs Face Reckoning, Formulary Exclusions Rise Again in 2023

In 2023, the country’s three largest PBMs are each excluding around 600 drugs from their standard formularies, according to a recent analysis from the Drug Channels Institute. That’s a greater number than ever before, as drug exclusion lists have risen every year for roughly the last decade. To one industry observer, that trend demonstrates the sticking power of the reigning PBM business model.

“The exclusion lists really reflect just the ongoing interest that PBMs have in increasing their bargaining power to leverage rebates,” says Ryan Urgo, a managing director at Avalere Health. It shows, ultimately, that “the rebate model remains alive and well,” he adds, referring to PBMs’ ability to negotiate deep discounts on branded drugs in exchange for favorable formulary placement, even if those drugs may have a higher list price.

© 2024 MMIT
Leslie Small

Leslie Small

Leslie has been working in journalism since 2009 and reporting on the health care industry since 2014. She has covered the many ups and downs of the Affordable Care Act exchanges, the failed health insurer mega-mergers, and hundreds of other storylines spanning subjects such as Medicaid managed care, Medicare Advantage, employer-sponsored insurance, and prescription drug coverage. As the managing editor of Health Plan Weekly and Radar on Drug Benefits, she writes and edits for both publications while overseeing a small team of reporters who also focus on the managed care sector. Before joining AIS Health, she was a senior editor for the e-newsletter Fierce Health Payer, and she started her career as a copy editor at multiple local newspapers. She graduated with a dual degree in journalism and political science from Penn State University.

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