Written Testimony for the ERISA Advisory Council Hearing on PBM Compensation and Fee Disclosure

This document is the written testimony of Joanna Shepherd, Ph.D., professor at Emory University, to the ERISA Advisory Council. Shepherd's testimony provides an economic analysis explaining why mandatory disclosure regulations for PBMs are unnecessary and would likely increase costs for consumers and employers by reducing competition in the PBM industry. Shepherd argues that employer health plan sponsors are sophisticated purchasers that can negotiate desired disclosure terms, and that existing contracts already require PBMs to pass through a significant portion of rebates and discounts. Mandatory disclosure would enable pharmacies and drug manufacturers to obtain competitively-sensitive information, reducing PBMs' ability to negotiate discounts and leading to higher prices.