What are Pharmacy Benefit Managers (PBMs) and their benefits?

pharmacy benefit managers

Pharmacy Benefit Managers (PBMs) serve as your advocates within the health care system, aiming to reduce prescription prices for patients and payers nationwide.

PBMs manage prescription plans for over 266 million Americans who have health insurance through a variety of different sources, including commercial health plans, self-insured employer plans, union plans, Medicare Part D plans, the Federal Employees Health Benefits Program (FEHBP), state government employee plans, and managed Medicaid plans. Over the next decade, PBMs will save health plan sponsors and consumers more than $1 trillion on medicines.

PBMs will aid in the prevention of 1 billion pharmaceutical mistakes during the next decade. PBMs increase therapy and patient adherence in diabetic patients, averting around 480,000 heart failures, 230,000 kidney disease occurrences, 180,000 strokes, and 8,000 amputations each year.

pharmacy benefit managers

Additionally, PBMs will assist extend and improve the quality of life for patients with multiple sclerosis and rheumatoid arthritis by roughly 1 million Quality Adjusted Life Years (QALYs) over ten years through specialty pharmacy services.

PBMs developed almost two decades ago. Today, health care plans contract with PBMs to negotiate lower prescription prices on their behalf, transferring the savings directly to patients. Pharmaceutical benefit managers (PBMs) are your first line of defense against escalating prescription expenses. They seek to achieve lower costs and improved health outcomes by ensuring affordable access to necessary medications.

However, what do these PBMs do? 

PBMs process about two-thirds of US doctors’ 6 billion prescriptions written yearly. Commercial and public insurers contract with PBMs to manage their health plans’ prescription benefits. PBMs accomplish this by compiling lists—or formularies—of the pharmaceuticals covered by a health insurer and negotiating rebates and discounts on prescription on their behalf. This means that PBMs establish the price paid by insurers to manufacturers and the price paid by consumers at the pharmacy counter.

Due to their prominent position in the medication supply chain, PBMs can also build pharmacy networks, participate in reimbursement negotiations, and execute clinical care management systems.

What is the relationship between PBMs and health systems?

Health systems frequently have a unique chance to collaborate with PBMs as health plan sponsors and providers and can often benefit from their experience and resources.

For example, pharmacy leaders can work with the benefits team and play a critical role during discussions with PBMs. Pharmacy leaders have attended nearly all of the organization’s meetings with the health system’s PBM at one large AMC in the South. During a recent conference, pharmacy leaders discussed why the PBM’s copay accumulator program, which aims to limit usage by deducting copay assistance from a patient’s deductible and out-of-pocket maximum, would be detrimental to the health system to the potential for decreased patient adherence.

Additionally, they can increase the value of formularies by eliminating high-cost medications and standardizing formularies across settings. The pharmacy team at a prominent nonprofit organization in the South evaluated PBM claims and identified potential cost savings options. The VP of Pharmacy discovered a large volume of prescriptions for a brand-name ointment had been written. When she informed doctors about the generic version of the medication, the system witnessed a decrease in brand-name prescriptions filled and saved hundreds of dollars.

PBMs’ Responsibilities

Logistics are involved in delivering to you. A PBM must fulfill various obligations to ensure efficiency, including the following:

  • bargain for rebates
  • conduct mail-order business
  • surveillance of patient compliance
  • conduct use audits
  • adjudicate claims
  • preserve formularies
  • control distribution across a pharmacy network
  • give services in specialty pharmacy

The advantages of collaborating with a PBM


PBMs can save money by negotiating reductions with pharmacies and delivering cost-effective mail order fulfillment services. Through using a formulary, PBMs direct plan participants to more cost-effective medications.

Data & Insights

Employers have access to data that detail prescription consumption, assisting in reducing waste and promoting patient adherence to prescribed medication regimens.


PBMs make it simple for employers to stay current on advances in the field of prescription pharmaceuticals by informing them about industry changes in pricing, safety, efficacy, and much more.

Choosing a PBM to assist you in managing your prescription claim costs might be difficult. Knowing the appropriate questions to ask PBM candidates will assist you in selecting a PBM that can help you save money on prescription claims.

Benefits of PBM

PBMs can also help payers’ beneficiaries adhere to their prescription regimens.

Increased adherence rates assist payers in determining if the pharmaceuticals they purchase are being used effectively to treat medical illnesses and are associated with the improvement of costly chronic diseases, as determined by the National Institutes of Health.

PBMs frequently collaborate with specialty pharmacies to assist beneficiaries who have difficulty adhering to their medications and provide educational resources on the unique benefits of adherence.

Additionally, PBMs have substantial expertise and ties with pharmaceutical firms, benefitting them when negotiating value-based contracts.

While payers frequently struggle to negotiate value-based contracts with pharmaceutical companies, according to PricewaterhouseCoopers analysts, PBMs market themselves as competitive negotiators. Additionally, PBMs often receive significant savings on medications and manufacturer rebates.

Payers can save money by integrating pharmacy and medical benefits and developing innovative internal methods to increase adherence.

According to Cigna research, integrated medical and pharmacy benefits can assist companies who sponsor their health plans save money each year, decreasing opioid overprescribing and increasing adherence rates.

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