A PBM, or Pharmacy Benefit Manager, is a company that manages
prescription drug benefits on behalf of health insurance providers and employers. They
work to negotiate drug prices, choose which drugs will be covered by insurance, and
handle the processing of drug claims. Essentially, they act as a middleman between
insurers, drug companies, and pharmacies.
PBMs are for-profit companies that
“manage” prescription drug benefits for more than 266 million Americans on behalf of
payers, including private insurers, Medicare Part D drug plans, government employee
plans, large employers, and Medicaid Managed Care Organizations
(MCOs).
PBMs help payers:
- Create a list of covered drugs
for plans (“a formulary”);- Manage drug utilization by enrollees (e.g., by setting
copays, prior authorization policies, etc.);- Reimburse pharmacies for providing the
enrollee drugs.
