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Illustration: Sarah Grillo/Axios

We keep mentioning “middlemen” as part of the complex, expensive drug supply chain. They’re actually called pharmacy benefit managers, or PBMs, and their role in the system is both incredibly important and incredibly opaque.

How it works: PBMs are hired by an insurance company or a self-insured employer.

  • Their job is to take care of the prescription-drug coverage for that insurance plan, which includes negotiating with drug companies for discounted prices.
  • PBMs are a big part of the reason overall drug spending has held pretty steady lately, even as sticker prices rise.

The intrigue: PBMs do this through a complex system of rebates, in which they hang onto a percentage of the discounts they negotiate.

  • PBMs' primary business model is drawing increasing scrutiny, as critics suggest it gives them a perverse incentive to play along with higher drug prices. Ohio's Medicaid program, for example, recently forced its PBMs to move to a new system of fixed fees.

Axios was able to bring some light into the darkness of the PBM world earlier this year, after we obtained a copy of a contract template used by Express Scripts, the country’s biggest PBM.

  • That document helped illuminate the many subtle ways these companies are able to tilt the playing field in their favor as they work with employers and insurance plans.

Read the full investigation here to go deeper on a critical part of the health care industry.

Go deeper: Read the rest of Axios' Deep Dive on prescription drug prices

Go deeper

23 mins ago - World

South Africa says it's being "punished" for detecting new COVID variant

South African Foreign Minister Naledi Pandor addresses the 76th Session of the U.N. General Assembly on September 22, 2021 in New York City. Photo: Eduardo Munoz - Pool/Getty Images)

South Africa said Saturday it's being "punished" for detecting the new Omicron coronavirus variant as more countries rush to enact travel bans and restrictions.

Driving the news: The U.S. imposed air travel restrictions from eight countries Friday in response to the Omicron variant. Countries in Europe and Asia have also implemented their own travel restrictions in response to Omicron.

Trump can't quit mainstream media

Bob Woodward and Robert Costa are interviewed by Chuck Todd on "Meet the Press" in September. Photo: William B. Plowman/NBC via Getty Images

Bob Woodward and Robert Costa issued a rebuttal on Friday to a statement by former President Donald Trump that misrepresented their reporting — and once again showed the 45th president's thin skin about mainstream media.

Driving the news: "Former President Trump said ... our book, 'Peril,' implied that he was planning to go to war with China," the statement begins. "[W]e report that Chairman of Joint Chiefs Mark Milley 'believed that Trump did not want a war' before or after the 2020 election."

NY declares state of emergency amid concerns over Omicron COVID variant

Governor Kathy Hochul makes an announcement about a new plan transforming Penn Station on Nov. 3, 2021. Photo: Lev Radin/Pacific Press/LightRocket via Getty Images

New York Gov. Kathy Hochul on Friday declared a state of emergency amid rising COVID-19 cases and the newly-identified Omicron variant of the virus.

Driving the news: The declaration enables the state to acquire supplies to fight a potential surge in cases, increase hospital capacity and combat potential staff shortages, NBC's local affiliate reports.

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