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As Americans grapple with prescription drug costs, two new companies are being launched in hopes of transforming the opaque pharmaceutical supply chain that bedevils employers.

The Mark Cuban Cost Plus Drug Company and the Purchaser Business Group on Health, a coalition of 40 large private and public employers, are both creating pharmacy benefits managers. Known as PBMs, these controversial, behind-the-scenes entities play a crucial role in establishing prescription drug prices across the U.S.


PBMs create formularies — lists of medicines that are covered by insurance — and, in the process, collect rebates from drug makers. But the tactic is blamed for rising drug prices, since the amounts are confidential. Drug makers claim PBMs, which keep a percentage of rebates, demand higher amounts to bolster profits and, in turn, they must respond by raising prices. For their part, PBMs counter that rebates blunt the price hikes drug makers regularly push through to boost their own profits.

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