Term of the Day – Pharmacy Benefit Management
Pharmacy Benefit Managers (PBMs) are one of the most widely used services in the US for prescription drug administration. They are third party and contract with pharmacies to negotiate discounts and rebates with drug manufactures. Today, more than 210 million Americans receive drug benefits administered by PBMs.
PBMs are responsible for processing and paying prescription drug claims and for maintaining the list of prescription drugs covered by a particular drug benefit plan. Because they have a larger pool for prescription drugs, they are able to negotiate discounts and rebates. Their services can also include things like tablet splitting and mail orders.
There are currently 60 or so PBMs in the US. Some are independently owned and others are divisions of bigger companies, chain drugs stores and managed care plans. They compete to win business by offering clients the ability to manage their drug spending and increase cost-effectiveness of their medications.
PBMs have many advantages, but each PBM uses the available services differently, depending on their client’s need. For example, PBMs monitor prescription safety across all pharmacy networks to catch potential drug interactions.
Just two days ago, CVS broke the news that they were removing Walgreen Co. from their Pharmacy Benefits Manager business, saying they had violated an existing agreement. They accuse Walgreens of seeking higher reimbursement rates when they already receive rates similar to those of other major national chains.