Hoping to slow the rising cost of providing health coverage, 50 of the country's largest employers are creating a buyers club to bargain directly with drug makers on behalf of five million active and retired employees and their families.
The move is a major departure from the current industry practice, in which employers typically pay middlemen — known as pharmacy benefit management companies — to provide drug coverage for their insured workers. Those prices are supposed to be at discounted rates. But because drug pricing is notoriously opaque, employers cannot be sure they are getting the best possible deal.
By shrinking the role of middlemen in their drug plans, the employers hope to seize control of a system that they say has fueled one of their fastest growing costs. The 50 employers in the buyers group spent roughly $4 billion for prescription drugs last year. Overall, the nation's employers spend more than $70 billion through pharmacy benefit managers, and their drug bills rose 9.1 percent in 2003, on top of eight years of double-digit increases.
Employers say they typically cannot determine the true costs of drugs, which are largely based on discounts from murky "average wholesale prices" that are quoted by the industry but which no one actually pays.
http://www.nytimes.com/2004/06/11/business/11CND-DRUG.html?hp
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