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June 4, 2026Econometrica

Comment on ‘Fisher–Schultz Lecture: Contracting Over Pharmaceutical Formularies and Rebates’ by Kate Ho and Robin Lee

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Authors

RCRena M. Conti

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Overview

Commentary discusses PBM effectiveness in managing drug access and costs, suggesting further exploration of market dynamics.

Key Points

  • This commentary critiques the role of pharmacy benefit managers (PBMs) in managing pharmaceutical access and costs, highlighting gaps in current research.
  • Reviewed models by Ho and Lee on PBM tiered formularies and payor savings.
  • Discussed the impact of patient demand inertia on PBM pricing strategies.
  • Analyzed formulary auctions and PBM induced pricing dynamics.
  • PBMs' tiered formularies generate significant payor savings through competition.
  • Patient demand inertia limits PBMs' effectiveness in negotiating price concessions, undermining potential savings.
  • Formulary auctions reveal that larger PBMs can drive savings but may also lead to increased list prices, reducing patient access.

Cite This Study

Rena M. Conti (2026) studied this question.

synapsesocial.com/papers/6a2117fdd499ed480b170e35https://doi.org/10.3982/ecta24210
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