Pharmacy benefit managers

Pharmacy Benefit Managers (PBMs) are companies that administer prescription drug plans for insurers, Medicare Part D drug plans, large employers, and other payers. By negotiating with pharmacies and pharmaceutical companies, they aim to control drug spending while ensuring patient access to medications. The role of PBMs has evolved significantly since their inception in the 1960s, becoming integral to the operation of the United States healthcare system.

History

The concept of PBMs began in the late 1960s, with the primary goal of processing prescription drug claims electronically. This was a significant shift from the traditional paper-based process, offering a more efficient and accurate system for managing prescriptions. Over the decades, the responsibilities of PBMs have expanded to include drug formulary management, negotiating discounts and rebates with drug manufacturers, and managing pharmacy networks.

Functions

PBMs perform several key functions within the healthcare system:

• Formulary Management: PBMs develop and maintain lists of preferred drugs, known as formularies, which are selected based on their efficacy, safety, and cost-effectiveness. These formularies guide prescribing practices and encourage the use of generic or more cost-effective drugs.

• Drug Utilization Review: This involves evaluating prescribing, dispensing, and use of medications to ensure that drugs are used appropriately and safely. It aims to prevent overuse, underuse, or misuse of prescription drugs.

• Negotiation of Discounts and Rebates: PBMs negotiate with pharmaceutical companies to obtain discounts and rebates on drugs. These negotiations can significantly lower the cost of drugs for their clients and patients.

• Pharmacy Network Management: PBMs contract with a network of pharmacies to provide prescription services to their members. They negotiate the terms and reimbursement rates for pharmacies within the network.

Controversies

PBMs have been subject to criticism and controversy. Critics argue that the lack of transparency in PBM operations and their negotiations with drug manufacturers can lead to higher drug prices. There are concerns that the savings negotiated by PBMs are not always passed on to consumers or payers. Additionally, the consolidation of the PBM industry has raised antitrust concerns.

Regulation

In response to these concerns, there have been calls for increased regulation of PBMs. Some states have enacted legislation aimed at improving transparency and reducing potential conflicts of interest. At the federal level, there have been proposals to regulate PBMs more strictly, particularly in the context of Medicare and Medicaid.

Future Trends

The role of PBMs is likely to continue evolving in response to changes in the healthcare landscape, including the growth of specialty pharmaceuticals, the increasing focus on value-based care, and technological advancements. There is also a growing emphasis on patient-centered services, such as medication therapy management.