PBMs

Extracted Attributes

• Role

  Third-party administrator of prescription drug programs

• Criticisms

  Unfair business practices, unfairly raising drug prices, lack of transparency, vertical integration, potential stifling of pharmaceutical R&D (as a consequence of reform efforts)

• Major Players

  CVS Caremark, Cigna Express Scripts, UnitedHealth Group’s Optum Rx

• Primary Location

  United States

• Services Provided

  Managing formularies, maintaining pharmacy networks, setting up rebate payments to pharmacies, processing prescription drug claims, providing mail order services, managing drug use, negotiating price discounts from retail pharmacies, negotiating rebates from pharmaceutical manufacturers

• Market Share (2023)

  Approximately 80% held by the three largest PBMs

• Market Value (2024)

  Nearly $600 billion

• Regulatory Response

  Several states have implemented regulations and policies governing PBM business practices

• Americans Served (2023)

  275 million

Timeline

• Pharmacy Benefit Managers (PBMs) emerged in response to demand for specialized management of prescription drug benefits. (Source: Web Search Results)

  1950s (late)

• PBMs managed pharmacy benefits for 275 million Americans, with the three largest PBMs holding approximately 80% of the market share. (Source: Wikipedia, Summary)

  2023

• The PBM market was estimated to be worth nearly $600 billion. The New York Times, Federal Trade Commission, and state attorneys general accused PBMs of unfairly raising prices on drugs. (Source: Wikipedia, Summary)

  2024

• Several states have implemented regulations and policies concerning PBM business practices in response to criticism. (Source: Wikipedia, Summary)

  Ongoing

• Discussions have occurred regarding the need to reform middlemen like PBMs in the context of efforts to lower drug prices, such as through executive orders on pharma benefits, and the rising competitive pressure from China's pharmaceutical industry. (Source: Related Documents, Summary)

  Ongoing

Pharmacy benefit management

In the United States, a pharmacy benefit manager (PBM) is a third-party administrator of prescription drug programs for commercial health plans, self-insured employer plans, Medicare Part D plans, the Federal Employees Health Benefits Program, and state government employee plans. PBMs operate inside of integrated healthcare systems (e.g., Kaiser Permanente or Veterans Health Administration), as part of retail pharmacies (e.g., CVS Pharmacy), and as part of insurance companies (e.g., UnitedHealth Group). The role of pharmacy benefit managers includes managing formularies, maintaining a pharmacy network, setting up rebate payments to pharmacies, processing prescription drug claims, providing mail order services, and managing drug use. PBMs play a role as the middlemen between pharmacies, drug manufacturers, wholesalers, and health insurance plan companies. As of 2023, PBMs managed pharmacy benefits for 275 million Americans and the three largest PBMs in the US, CVS Caremark, Cigna Express Scripts, and UnitedHealth Group’s Optum Rx, make up about 80% of the market share covering about 270 million people with a market of almost $600 billion in 2024. This consolidation and concentration has led to lawsuits and bipartisan criticism for unfair business practices. In 2024, The New York Times, Federal Trade Commission, and many states' attorneys general accused pharmacy benefit managers of unfairly raising prices on drugs. Additionally, several states have created regulations and policies concerning PBM business practices.

Web Search Results

• Pharmacy benefit management - Wikipedia

  In the United States, a pharmacy benefit manager (PBM) is a third-party administrator of prescription drug programs for commercial health plans, self-insured employer plans, Medicare Part D plans, the Federal Employees Health Benefits Program, and state government employee plans.( PBMs operate inside of integrated healthcare systems (e.g., Kaiser Permanente or Veterans Health Administration), as part of retail pharmacies (e.g., CVS Pharmacy), and as part of insurance companies (e.g., [...] The role of pharmacy benefit managers includes managing formularies, maintaining a pharmacy network, setting up rebate payments to pharmacies, processing prescription drug claims, providing mail order services, and managing drug use. PBMs play a role as the middlemen between pharmacies, drug manufacturers, wholesalers, and health insurance plan companies.( [...] enabling plan sponsors and individuals to obtain lower prices for their prescription drugs. PBMs negotiate price discounts from retail pharmacies, rebates from pharmaceutical manufacturers, and mail-service pharmacies which home-deliver prescriptions without consulting face-to-face with a pharmacist.(

• Pharmacy Benefit Managers: History, Business Practices ...

  Pharmacy benefit managers (PBMs) play a major role in the provision of pharmacy services by acting as the intermediary between pharmacies, plan sponsors (insurance companies and employers), pharmaceutical manufacturers, and drug wholesalers.1\-4 Pharmacy benefit managers emerged in the late 1950s in response to demand for specialized management of prescription drug benefits. Over the decades, PBMs have expanded their influence in the pharmaceutical supply chain and now handle claims processing, [...] Importance Pharmacy benefit managers (PBMs) play a major role in the provision of pharmacy services by acting as intermediaries between pharmacies, plan sponsors (insurance companies and employers), pharmaceutical manufacturers, and drug wholesalers. As their role and visibility have increased, PBMs have come under increased scrutiny from policymakers. However, no prior literature has systematically described the history, business practices, and policymaking of PBMs. [...] In executing their core functions, PBMs affect the financial interest of various stakeholders (Figure 2). For drug manufacturers, PBMs have control over branded drugs’ sales volume through formulary design and utilization management. They also affect branded drug manufacturers’ net sales revenue through price concessions. For pharmacies, PBMs influence patient access to retail, mail order, and specialty pharmacies (thereby affecting pharmacies’ sales), and PBM-pharmacy contracts determine

• The Value of Pharmacy Benefit Managers - CVS Health

  Pharmacy benefit managers, or PBMs, manage prescription drug benefits for clients ranging from health insurers and Medicare Part D drug plans to large employers. PBMs are one of the few parts of the prescription drug supply chain specifically dedicated to lowering costs. #### How Caremark helps lower costs Female ordering prescription refill on tablet [...] As part of CVS Health®, CVS Caremark® plays a critical role in the health care system by negotiating low net costs for our customers while supporting safe and clinically effective products for consumers. Beyond traditional PBMs, we use an integrated model to increase access to care, deliver better health outcomes and help lower overall health care costs. ### Get to know pharmacy benefit managers #### What are PBMs [...] ### Healthy Community- Healthy Community ### Healthy Planet- Healthy Planet ### Healthy Business- Healthy Business ### Reporting and Governance- Reporting and Governance CVS Health logo # Pharmacy benefit manager Designing and administering cost-effective prescription drug plans that meet the financial and health care needs of our customers and members Person ordering prescription refill on mobile device ### The impact of pharmacy benefit managers (PBMs)

• 5 Things To Know About Pharmacy Benefit Managers

  This column discusses what PBMs do, how some PBM practices can inflate prices and hinder transparency, and how PBMs fit into the broader drug pricing system and highly concentrated health care markets. The column also highlights other key actors and practices driving high drug prices and outlines actions policymakers can take to protect consumers and make drugs more affordable through PBM reforms. ### PBMs are middlemen between drug companies, insurers, and pharmacies [...] PBMs act as negotiating entities between several actors in the prescription drug supply chain. Insurers work with PBMs as third-party contractors that manage their prescription drug benefits. PBMs create and update formularies of preferred drugs, with different prices and cost-sharing amounts that influence what beneficiaries pay out of pocket and which medications they can access through their insurance. PBMs negotiate rebates and discounts for an insurance plan from drug manufacturers and [...] PBMs play a significant role in determining the drug prices health insurance plans—and ultimately patients—pay for prescription drugs. PBMs set the payments pharmacies receive from insurers for dispensing drugs to patients and decide which drugs consumers have access to by developing an insurer’s prescription drug formulary. Research suggests that PBMs profit by artificially inflating drug prices, capturing portions of the discounts they negotiate for insurers and pocketing the difference

• [PDF] Pharmacy Benefit Managers: The Powerful Middlemen Inflating ...

  Decades ago, PBMs began as administrative service providers working to validate and process pharmacy benefits provided by separate insurance plans. They then expanded into negotiating with pharmaceutical manufacturers on behalf of those plan clients, developing reimbursement terms and conditions for pharmacies, and developing formularies (i.e., lists of drugs a health plan will cover and reimburse for). But now, after years of acquisitions, the leading PBMs are each part of massive healthcare [...] affordability of medicines. It describes how, amidst increasing vertical integration and concentration, these powerful middlemen may be profiting by inflating drug costs and squeezing Main Street pharmacies. PBMs are at the center of the complex pharmaceutical distribution chain that delivers a wide variety of medicines from manufacturers to patients. PBMs serve as middlemen, negotiating the terms and conditions for access to prescription drugs for hundreds of millions of Americans. Due to [...] integrated within massive conglomerates that provide a broad range of services across the pharmaceutical supply chain and other segments of the healthcare sector, as illustrated in Figure 1. Various PBMs are now vertically integrated with upstream suppliers of goods and services, including drug private labelers and provider groups. PBMs are also vertically integrated with midstream distributors, including retail, mail order, and specialty pharmacies. Downstream, PBMs are vertically integrated