Two tin cans and a length of string make a working telephone. The whole arrangement depends on one condition. The string has to be pulled tight. Let it go slack and the voice at the other end disappears, though nothing has broken and both cans are exactly where they were.
PBMs are often criticized for work their clients hired them to do. This is one of several things a PBM cannot say.
What cannot be seen
For many people, a PBM becomes visible at the pharmacy counter when a prescription does not go through. The drug needs prior authorization. The plan requires that a patient try a different drug first. The quantity is more than the plan allows. Whatever the reason, the experience is specific, immediate, and personal. Someone wanted a medicine and did not get it that day.
A denial is tangible. Utilization management (UM) can prevent a treatment that duplicates something already tried, a drug that adds risk without adding benefit, or a quantity beyond what the condition calls for. When that happens, the denial is recorded. What was prevented is not recorded because it never occurred. There is no story.
Prescriptions that are never written are the hardest cases to estimate. A prescriber who knows a drug will not meet the criteria prescribes something else. Nothing is denied, because nothing is asked and requests never made do not appear in the data. A PBM can report how many requests it received and how many it approved. It cannot directly count requests it prevented.
A PBM can present aggregate evidence, but it cannot offer a personal account of an event that never occurred. The PBM has less to say and a less vivid way to illustrate it, so an informational asymmetry becomes a rhetorical one. A person’s story is easier to picture, and research on persuasion has found that individual examples can move judgments more than base rates do. But while it may be easier to remember, the individual example may not be representative and, by itself, says nothing about how often cases like it happen.
What cannot be shown
The rebate terms behind a formulary decision exist in writing, but they are confidential.
PBMs negotiate discounts and rebates with drug manufacturers. These contractual terms stay confidential because manufacturers do not want a price extended to one purchaser visible to every other purchaser. Rebate guarantees depend on those same confidential terms. A PBM can explain how rebates work and the clinical and economic considerations behind a formulary decision. But it cannot disclose the confidential terms needed for an outsider to reconstruct the full calculation. Confidential is not the same as unexplained.
Plan sponsors have alternatives to rebate guarantees and to rebate-based arrangements. Pass-through arrangements, in which the sponsor receives the rebates collected rather than a guaranteed amount, have been available for years. So have formulary strategies that favor lower-list-price products over higher-rebate ones. Plan sponsors have often preferred rebate-based arrangements and rebate guarantees in particular.
Recent Federal Trade Commission (FTC) settlement agreements involving major PBMs require a standard offering that allows plan sponsors to move away from rebate guarantees. Plan sponsors may select different terms but must acknowledge in writing that they received, read, and understood an explanation of the standard offering. As these requirements take effect in 2027 and 2028, keeping rebate guarantees will be a documented choice.
Member records are confidential as well, by law rather than by contract. A member can describe a denied prescription with a name, a diagnosis, and a date because it is the member’s own story to tell. Without the member’s written authorization, the PBM cannot respond publicly with the member’s health information. The HIPAA privacy law provides no self-defense exception, even when the member has already made the information public. Federal regulators have penalized health care providers that disclosed patient information while responding to online reviews. A PBM that says nothing about a member’s case is often following the law.
What should not be said
Plan sponsors buy UM. Employers, health plans, and government programs ask for prior authorization, step therapy, and quantity limits, and savings are among the measures they use to judge the companies that administer these rules. Plan sponsors select the pricing model as well. The formulary, the tiers, and the rules applied at the counter were adopted by the organization paying for the benefit.
The PBM that applies the rule is present when the outcome of its application is felt. The plan sponsor that chose the design is nowhere in the encounter.
A PBM can explain in general terms that plan sponsors select their benefit designs. Responding to a specific criticism by naming the customer that chose the design is another matter. A company does not respond to criticism by pointing at its customer, and a customer that is not being criticized has little reason to speak up. Research on how organizations respond to public criticism suggests that shifting responsibility to another party can make matters worse when audiences already hold the organization responsible. The fullest account is therefore one that neither party is willing to give.
What is likely heard
People tend to interpret new information in light of what they already believe, whether from what others have told them or from their own experience. They also tend to remember what reinforces those beliefs. Communication research calls these tendencies selective perception and selective retention.
For anyone who followed health care in the 1990s, an insurer refusing to pay for care is a familiar story. Blendon and colleagues, writing in Health Affairs in 1998, examined the depth and breadth of the public backlash against managed care, which by then had produced more than a thousand bills in state legislatures responding to consumer fears about losing control of their care.
A prescription that does not go through at the counter can look like an insurer refusing care. People may put the PBM that applied the rule in the insurer’s place, so what the PBM says can be heard as the insurer’s side of that story. This explanation may compete with a judgment the audience has reached before the PBM says anything. The judgment involves only one step: Someone needed a drug and did not get it. A full explanation involves several steps. It would have to cover what the requirement prevents, why the rebate terms are confidential, and who chose the design. The explanation also comes from the party being criticized, so the evidence put forth may be discounted before it is read.
What can be said
A PBM cannot give the full account, but it can give a credible one. It can acknowledge that some requirements it was hired to administer create burden that is not justified by what they accomplish. It can also explain how requirements are reviewed and revised continually so the unjustified ones can be identified and changed. A review of persuasion studies found that acknowledging a criticism and then responding to it tends to make a message more credible and more persuasive. Acknowledging a criticism without responding tends to make the message less persuasive.
A PBM can also point to the exceptions process for cases that do not fit a rule. When a requirement is changed or dropped, a PBM can track what happens afterward and estimate what UM prevents: duplicative treatment, added risk, and unnecessary cost. It can describe how rebates work and the arrangements available to plan sponsors, without disclosing any contractual terms. Once the FTC requirements take effect, a PBM will be able to say how many of its clients kept rebate guarantees after reviewing the standard offering without naming any of them.
The timing of a PBM’s account matters as well. An explanation offered in response to a story arrives after the judgment has been made. An explanation already in circulation when the story arrives can be part of what the audience brings to it.
What UM prevents cannot be directly counted, and the confidential rebate terms cannot be disclosed. A PBM can still give an account grounded in evidence and be clear about what it cannot include. Whether that account is heard depends partly on what the audience already believes. A string carries a voice only when it is taut. The speaker holds only one end.