Pharmacy Benefit Managers (PBM) induce drug manufacturers to offer rebates to insurers and employers by denying coverage through formulary exclusions, impeding physician prescription through prior authorization, and reducing patient drug use through cost sharing. As they tighten these access obstacles, PBMs reduce the net prices received by the manufacturers.

Cost-benefit analysis--applying economic reasoning to increasingly complex health policy decisions--continues to be a source of vehement disagreement among its practitioners. re than merely technical issues in measurement and accounting are involved; basic social values embedded in different intellectual traditions are coming into conflict. The "human capital" and "willingness-to-pay" approaches can each aid policy formulation, but neither can substitute for open political process.

The social rate of discount--that is, the way decision makers today evaluate future consequences of collective activity--raises difficult issues of intergenerational justice. When benefits are discounted at the present rate the United States government requires, serious efforts to promote public health over the long term will fail cost-benefit tests. No consensus exists among theorists to establish fair rates; philosophers support discounting with economic arguments that economists reject, while economists no less paradoxically support the concept using philosophical arguments that philosophers disavow. (...) A new emphasis on the role of consumers' and citizens' time preferences, however, will keep open rather than close debates on the social discount rate. (shrink)