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Shedding light on the PBM game

Pharmacy benefits managers, third party administrators of prescription drug programs, are entering increasingly into a tricky game that sounds eerily familiar to anyone who was ever bullied by an older brother or sister.

By Dave Marley | Updated on April 30, 2012

Pharmacy benefits managers, third party administrators of prescription drug programs, are entering increasingly into a tricky game that sounds eerily familiar to anyone who was ever bullied by an older brother or sister. In recent years, PBMs have transitioned to a system in which they incentivize pharmacies to dispense brand-name drugs, which are generally much more expensive than their generic counterparts. In turn, prescription drug prices for plan sponsors and consumers continue to rise while the PBMs pocket the profits.

For benefits managers, it’s especially important to be aware of the ways in which PBMs are capable of manipulating drug pricing. By understanding the PBM business model, you’ll be better informed to ask the tough questions during contract negotiations and ensure that your contract is 100 percent transparent. You should be able to say with confidence that the money you’re giving to the PBM is no greater than the amount the PBM gives the pharmacist. But that’s rarely how it actually works.

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