Officials explain how PBM contracts and upper payment limits could lower county drug spending

Council members pressed presenters on how county contracts and pharmacy benefit managers (PBMs) factor into any savings the board seeks to create.

Andy York explained that UPLs for state and local government will be implemented through contracts and the PBM arrangements that govern pharmacy benefit administration. He described PBMs as originally designed to process claims and later developing formularies and rebate arrangements that determine preferred drugs and volume. "A pharmacy benefit manager is hired by your insurance company," York said, and he walked council members through how list prices, insurer payments and confidential manufacturer rebates can diverge from the out‑of‑pocket costs patients see at the pharmacy.

York and DeMarco used an insulin pricing example to show opacity in the supply chain: York described the wholesale acquisition cost and an industry expert's analogy of an MSRP that no longer reflects the net price, saying the result is "a complete black box" for the true end cost. Council members asked whether federal actions could force transparency; presenters pointed to the Inflation Reduction Act's Medicare negotiation authority as a partial remedy but said many pricing elements remain confidential.

York asked county staff to help identify PBM contracts and other payer agreements so the board can determine where UPLs should be applied and to coordinate outreach about changes to contracts once regulations are published.