Healthcare costs continue to rise thanks to increases in prescription drug costs. With many people relying on low or limited incomes, lawmakers and regulators have worked to make these prices more manageable, but challenges remain.
One of the most controversial developments in the prescription drug supply chain that impacts how consumers pay for vital drugs is the rise of pharmacy benefit managers, or PBMs.
In recent years, PBMs took over a key middle role in getting drugs from manufacturers to patients. They receive some credit for lowering overall prices. Many blame them for tilting the balance in favor of national drugstore chains and putting independent and community chain pharmacies in difficult straits.
By adding efficiencies and managing access for some of the industry’s most vulnerable consumers, PBMs benefit an often criticized field.
What a PBM Is
PBMs emerged to help manage the overall costs of prescription medications. They manage prescription drug benefits for government programs, such as Medicare Part D, major employers from both government and private sector, and other stakeholders.
Their purpose lies in working to reduce the costs of medications to insurers, government agencies, and individuals.
PBMs work closely with pharmacy chains. Some merged with major pharmacy chains, which invited debate and controversy. In response to criticism, lawmakers and stakeholders proposed reforms, including:
- Requiring more transparency in the rebate deals that PBMs negotiate with partners
- Banning the practice of spread pricing, which can adversely affect drug prices
- Mandating that PBMs include consumers in any rebates received, which could lower drug prices in some cases
Currently, these rebates go almost exclusively to drug companies and those who pay for insurance.
With PBMs being a relatively new actor in the prescription drug world, naturally the state and federal government may need to periodically adjust regulations and rules governing them.
Responsibilities of PBMs
PBMs have a number of important responsibilities as middle men in the prescription drug market. These include but are not limited to:
- Operation of mail order services
- Work to make sure that patients take medicines as directed
- Manage the distribution of products to pharmacies
- Expand affordable options through negotiation
- Process pharmacy and patient claims
- Manage formularies to ensure that patients get the right medications
These responsibilities make PBMs one of the most essential parts of the chain linking drug companies and consumers.
By undertaking these responsibilities, PBMs offer benefits to the industry and consumers alike.
Benefits of PBMs
PBMs have enjoyed a track record of reducing the costs of many, but not all, important drugs on the market. They centralize processes and promote cooperation through the supply chain, which can increase efficiencies and drop prices.
These benefits include but are not limited to:
- Ensuring that non mobile consumers can get the drugs they need via mail order
- Building networks of pharmacies that offer drugs at more affordable prices
- Promoting the use of less expensive but comparable prescription drug options, such as generics and alternative brands
- Negotiating rebates from manufacturers and obtaining discounts from retail
- Helping to make high-cost specialty medications more accessible
- Reducing waste and increasing efficiencies
Reach Out Today
Learn more about the role of PBMs in terms of how they support employers, drug companies, and consumers through price lowering and other programs. Our staff will answer any questions about PBMs and how we work with them.
Let us work with you to get access to the best health care costs possible with prescription drugs. Call today to find out how your organization can benefit from these connections.