What Is a Pharmacy Benefit Manager?

What is a pharmacy benefits manager?

PBMs are companies that manage drug coverage for health insurers, large employers, and other companies that pay health benefits, such as unions or government agencies. These companies sit between your health insurance company and the drug manufacturers. In other words, PBMs are middlemen.

PBMs do some things that can directly affect you and your access to medications:

• Manage drug benefits on behalf of health insurers and employers.
• Create formularies or preferred drug lists, which determine what medications will and will not be covered in an insurance plan.
• Negotiate drug prices with drug manufacturers, including rebates and discounts.
• Negotiate the rates paid to pharmacies for the medications they sell.
• Process pharmacy claims for insurers and their members.
• Establish pharmacy networks to fill prescriptions for health plan members.
• Manage mail order pharmacies for specialty products.

Access to certain drugs is determined first by whether they are listed on the formulary and is then affected by the price of the drug. Your out-of-pocket costs for your medications are generally based on negotiated rates determined by the PBM.

Who owns PBMs?

PBMs are typically for-profit companies. Some are very big. The three largest PBMs reportedly cover more than 275 million Americans and realize almost 90% From the market. Some PBMs are independent. Others are owned by health insurance companies and/or large retail or specialty pharmacies.

What are the pros and cons of PBMs?

The main argument in favor of PBMs is that they can help reduce costs through negotiation. And for many people, drug costs pose real difficulties. In fact, almost 1 in 4 People in the US report having difficulty paying for medications.

The Centers for Medicare and Medicaid Services (CMS) has said that PBMs have helped lower drug prices. According to the Pharmaceutical Care Management Association (PCMA)the national association representing PBMs, PBMs will save health plans and individuals more than $1 trillion over 10 years.

At the same time, some critics suggest that PBMs have an incentive to promote more expensive drugs. PBMs often receive rebates based on a percentage of a drug’s list price. That means they make more money when people use more expensive drugs. PBMs can pass along some of those reimbursements to the health plan. And hopefully some of it will reach the consumer. But PBMs remain almost 10% of discounts.

What’s next for PBMs?

One trend among PBMs is to increase coverage of biosimilars, a type of medication used to treat diseases such as cancer, autoimmune disorders and diabetes.

Biosimilars are close copies of drugs called biological, which are made of material from living beings such as plants, bacteria, animals or humans. Examples include gene therapy, insulin, and monoclonal antibodies.

Biosimilars work in the same way as biologics and are just as safe and effective, but they can be much less expensive, as much as half the cost. Even so, they have not always been covered by health insurance.

Recently, several PBMs have Announced which will cover more biosimilars. This is likely to reduce costs for insurers. However, cost savings for patients from the use of biosimilars is not a given, due to the incentives described above. Patients should talk to their doctors about treatment options, such as biosimilars, that could save them money without affecting their overall care.

How to work with a PBM

As a patient, you may feel the effects of a PBM’s policies and decisions. But you may never do it directly. interact with the PBM unless you use a specialty or mail order pharmacy that they operate. If you’re having trouble getting coverage for a drug, you can start by talking to your health insurer or employer for help.