Health

What is a pharmacy benefits manager?

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Taking prescription drugs may be more American than apple pie. According to the Centers for Disease Control and Prevention (CDC), nearly half the people in the United States, report having taken at least one medication in the past 30 days. (In comparison, approximately 1 out of 10 Americans say apple is their favorite pie.)

Who decides which medications are covered by your health insurance and at what cost? You may think that the drug manufacturer, your health insurance company or your employer sets the rules and prices for prescription drug coverage – and they all play a role.

But perhaps the most important influence on drug coverage in the United States is one you’ve never heard of: the Pharmacy Benefits Manager (PBM). Given the influence PBMs have on covered drugs and their cost, you may want to understand who they are and how they work.

What is a pharmacy benefits manager?

PBMs are companies that manage drug coverage for health insurers, large employers, and other companies that pay for 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 several things that can directly affect you and your access to medications:

  • Administer pharmacy benefits on behalf of health insurers and employers
  • Create formularies or preferred drug lists, which determine which medications will and will not be covered by an insurance plan.
  • Negotiate drug prices with drug manufacturers, including rebates and discounts
  • Negotiate the rates paid to pharmacies for the medications they carry
  • Process pharmaceutical 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 medications is first determined by their listing on the formulary, and then is affected by the price of the medication. Your out-of-pocket costs for medications are generally based on negotiated rates determined by the PBM.

Who owns PBMs?

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

What are the advantages and disadvantages of PBMs?

The main argument in favor of PBMs is that they can help reduce costs through negotiation. And for many people, the cost of medications poses real challenges. In fact, almost 1 of 4 People in the United States report having difficulty paying for their medications.

The Centers for Medicare and Medicaid Services (CMS) has stated that PBMs Helped Lower Drug Prices. According to Pharmaceutical Care Management Association (PCMA)the national association that represents 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 discounts based on a percentage of a drug’s list price. This means they make more money when people use more expensive drugs. PBMs may pass on a portion of these discounts to the health plan. And I hope some of it reaches the consumer. But PBMs almost retain ten% discounts.

What’s next for PBMs?

A trend among PBMs is to increase coverage for biosimilarsa type of medicine used to treat diseases such as cancer, autoimmune diseases, and diabetes.

Biosimilars are close copies of drugs called Organic Products, which are made from materials from living things 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 as safe and effective, but can be much less expensive, where possible. half the cost. However, they have not always been covered by health insurance.

Recently, several PBMs have announcement that they will cover more biosimilars. This would likely reduce costs for insurers. However, patient savings from biosimilar use are not a given, due to the incentives described above. Patients should talk with their doctor about treatment options, such as biosimilars, that could save them money without impacting their overall care.

How to work with a PBM

As a patient, you can feel the effects of a PBM’s policies and decisions. But you could never directly interact with the PBM unless you use a mail order or specialty pharmacy that they operate. If you’re having trouble getting a medication covered, you should start by asking your health insurer or employer for help.

This resource was created with support from Organon.

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