Pharmacy benefit managers (PBMs) are third-party administrators that process prescription drugs for health insurance plans. Over time, the role of PBMs has expanded into healthcare management. PBMs are gaining greater influence over payer coverage, drug prices, manufacturer rebates, and pharmacy reimbursement policies.
Historically, the PBM industry dates back to the 1960s, when electronic claims processing gained traction, according to researchers at George Washington University. However, PBMs initally became a powerful force in the 1970s, with the development of the plastic drug benefit identification card. This innovation changed the process for purchasing prescriptions.
PBM Growth and Challenges
Today, PBMs face the challenging task of maintaining the delicate ecosystem for pharmaceutical coverage and reimbursement. According to the Pharmaceutical Care Management Association (PCMA):
“PBMs administer prescription drug plans for more than 266 million Americans who have health insurance from a variety of sponsors 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, managed Medicaid plans, and others.”
Specifically, pharmacy benefit managers are responsible for:
- Resolving therapy and prescription-related issues
- Monitoring prescription safety and outlining safe use
- Educating other medical professionals on pharmacy services
- Developing payer contracts to reduce consumer drug expenses
- Encouraging the use of generics and lower-cost medication
- Negotiating rebates and reimbursement policies with pharmaceutical manufacturers
Consolidation and Future Predictions
In upcoming years, pharma experts predict there will be more consolidation among PBMs, and the industry will become more technology friendly. To learn more about PBM challenges, view MMIT’s guide on overcoming formulary management and publishing challenges.
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