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If you’ve ever wondered how you get your medication at an affordable price, Pharmacy Benefit Management (PBM) companies are responsible for this. In this guide, we'll break down what PBMs do, the challenges they face, and how they affect the healthcare industry as a whole.
What Is Pharmacy Benefit Management?
PBMs work with health insurers, employers, and others who pay for medications to manage prescription drug programmes. They negotiate deals with drug companies, pharmacies, and doctors to get the best prices on medications and make sure they're available to you.
PBMs also create lists of preferred medications called formularies. These are the drugs that are covered by your insurance plan. PBMs also work to make sure doctors cost-effectively prescribe medications.
Why is PBM Important?
Prescription drugs are a vital part of healthcare, with Americans spending over $575 billion on them in 2021 alone. Most people rely on medication, with some needing just one for a short-term condition, while others require multiple medications for ongoing health issues. PBMs play a key role in managing prescription drug benefits for insurers and employers. They help guarantee access to a wide range of medications, including:
- Short-term medications to fight off illness or injury
- Long-term medications for chronic conditions
- Specialty drugs; highly specific treatments often only available from specialised pharmacies
Functions of Pharmacy Benefit Management
Drug Procurement
PBMs negotiate deals (called rebates) with drug companies to lower the overall cost of prescriptions. These savings are then passed on to your insurance company, ultimately affecting what you pay at the pharmacy.
Formulary Management
PBMs develop lists that outline which medications are covered by insurance plans and at what cost. This list shows which drugs your plan covers and how much you might contribute (co-pay or coinsurance) depending on the medication's effectiveness and cost. Lower-tier drugs on the list typically mean a smaller dent in your wallet.
Claims Processing
When you pick up a prescription, PBMs act like claim processors, checking your insurance eligibility, what's covered by your plan, and making sure the pricing is accurate. As a result, they keep things fair for everyone involved and ensure you get the medications you need.
Pharmacy Network Management
Pharmacy benefit managers work with a network of pharmacies, including your local drugstore, mail-order services, and specialists. This gives you the flexibility to choose the pharmacy that best suits your needs, whether it's convenience, affordability, or specific medication availability.
Utilisation Management
PBMs also help ensure your medications are used safely and efficiently. They might require pre-approval for certain drugs, limit quantities to avoid overstocking, or suggest alternative medications that are just as effective but more cost friendly.
Challenges in Pharmacy Benefit Management
- Drug pricing transparency: Figuring out how much medications cost is confusing for everyone involved, from PBMs to patients. Rebates and hidden pricing structures make it hard to see the real bottom line and judge if a medication is a good value.
- Drug formulary optimisation: Striking the right balance when creating drug lists (formularies) is a tricky feat. PBMs need to consider medical evidence, cost-effectiveness, and what patients want while controlling drug spending. It's a constant balancing act to ensure patients get the treatments they need without breaking the bank.
- Drug access and affordability: Rising drug prices and insurance co-pays can leave patients feeling the pinch. PBMs have their work cut out for them to negotiate better deals on medications and make sure patients can afford the treatments they need.
- Pharmacy reimbursement rates: Reimbursement rates set by PBMs can sometimes leave pharmacies feeling short-changed. These rates may not fully cover the costs of getting and dispensing medications, which can hurt pharmacies and ultimately limit patient access to care.
Benefits of Pharmacy Benefit Management
Cost Containment
Prescription medications are a vital part of healthcare, but they can also be a budget-buster. Pharmacy benefit managers like myMatrixx strike deals with drug companies for discounts and rebates. These savings are then passed on to patients and insurance companies, making medications more affordable for everyone.
Patient Access to Medications
PBMs work hard to ensure a wide range of medications are available at reasonable prices. They negotiate favourable deals with pharmacies and create large pharmacy networks, making it easier for patients to get the medications they need to stay healthy.
Clinical Oversight
PBMs use special programmes to ensure doctors prescribe the most effective and safest medications. These programmes help prevent medication errors, drug interactions, and unnecessary healthcare spending.
Innovation and Research
The world of medicine is constantly evolving, and PBMs play a part in that. They encourage the development of new, cost-effective medications and treatments. By carefully managing which medications are covered by insurance plans (formularies), they promote the use of proven therapies while discouraging ineffective ones.
This article is part of the HealthManagement.org Point-of-View Programme.
