PBMs (Pharmacy Benefit Managers)

Extracted Attributes

• Type

  Third-party administrator of prescription drug programs

• Clients

  Commercial health plans, self-insured employer plans, Medicare Part D plans, Federal Employees Health Benefits Program, state government employee plans

• Geographic Scope

  United States

• Primary Functions

  Managing formularies, maintaining pharmacy networks, setting up rebate payments, processing prescription drug claims, providing mail order services, managing drug use, negotiating pricing with manufacturers and pharmacies

• Top 3 PBMs (2023)

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

• Market Value (2024)

  Nearly $600 billion

• Americans Served (2023)

  275 million

• Market Share (Top 3 PBMs, 2023)

  Approximately 80%

Timeline

• PBMs emerged in the United States to help manage prescription drug benefits, set reimbursement rates, and process claims as insurers began integrating drug coverage. (Source: Wikipedia, Web Search)

  1950s-1960s

• PBMs managed pharmacy benefits for 275 million Americans, with the three largest PBMs (CVS Caremark, Cigna Express Scripts, Optum Rx) holding approximately 80% of the market share. (Source: Provided Summary, Wikipedia)

  2023

• The PBM market was valued at nearly $600 billion. (Source: Provided Summary, Wikipedia)

  2024

• The New York Times, Federal Trade Commission, and state attorneys general accused PBMs of unfairly raising drug prices, leading to lawsuits and bipartisan criticism. (Source: Provided Summary, Wikipedia)

  2024

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

  Ongoing

• Mark Cuban has been a vocal critic of PBMs, citing their opaque practices as a problem his venture, Cost Plus Drugs.com, aims to address. (Source: Related Documents, Provided 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

• PBM Policies and Their Impact on Drug and Device Costs

  Pharmacy Benefit Managers (PBMs) are third-party entities that manage prescription drug and other benefits for health insurers. They negotiate with both pharmacies and drug manufacturers (as well as some device manufacturers) to control spending, and they can help reduce the overall cost of drug purchases.

• 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, [...] Abstract ImportancePharmacy 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. [...] Conclusions and RelevancePharmacy benefit managers are intermediaries in the pharmaceutical supply chain and perform multiple roles in the management and distribution of pharmaceuticals to patients. When regulating PBMs, it is important to adopt policies that address market failure problems by improving PBM competition as opposed to policies designed to serve the narrow financial interests of other market participants (eg, pharmacies, pharmaceutical manufacturers) without meeting the needs of

• The impact of pharmacy benefit managers on community pharmacy

  Often called the “middleman” of the US pharmaceutical industry, PBMs today are third party administrators that exist between community pharmacies and insurance companies, as well as between insurance companies and drug manufacturers.8 The PBM system determines formulary coverage, sets copay tiers, processes drug claims, and negotiates contracts between insurers, manufacturers, and dispensing pharmacies.9 The main purpose of PBMs is to give consumers affordable access to prescription medication [...] PMCID: PMC10276176 PMID: 37333968 Abstract -------- ### Introduction The introduction of pharmacy benefit managers (PBMs) within the United States healthcare system occurred with the aim to decrease costs and increase quality. News media and legislation have painted a picture of decreased pharmacy competition and potential negative impacts on patients and their access to affordable medications. ### Objective [...] 6.Burns L. The U.S. Healthcare Ecosystem: Payers, Providers, Producers. McGraw Hill; 2021. Contracting for prescription drug benefits: Role of employers, insurers, and pharmacy benefit managers. Accessed May 19, 2023. [Google Scholar] 7.Pharmacy Benefit Managers (PBMs) Generating Savings for Plan Sponsors and Consumers. 2020. Accessed May 19, 2023.

• What Is the Role of a Pharmacy Benefits Manager (PBM)? | Capital Rx

  ## What is a Pharmacy Benefit Manager (PBM)? Put simply, a PBM is an administrator that processes prescription drug claims on behalf of “payers” (e.g., employers, municipalities, labor unions, health plans – including commercial, Medicaid, and Medicare through Part D plans – and other entities that provide prescription drug coverage to beneficiaries). [...] In addition to the responsibilities outlined above, PBMs are also responsible for: ### Contracting & Controlling Pharmacy Costs/Spending PBMs contract with everyone – drug manufacturers, mail order and retail pharmacies, and health plans, for example – and they negotiate pricing to provide patients and employers with better access to medication. They also ensure that pharmacies can offer competitive pricing to patients while also keeping prices within a predetermined range. [...] To provide this service, PBMs contract and negotiate with pharmaceutical manufacturers and retail pharmacies to provide the right balance of drug access and cost-effectiveness. PBMs also handle plan design, eligibility, card printing, formulary (the list of prescription drugs available to members) maintenance and creation, and hundreds of other tasks and processes behind the scenes.

• PBM Regulations on Drug Spending | Commonwealth Fund

  Are Pharmacy Benefit Managers the Next Target for Prescription Drug Reform? Pharmacy Benefit Managers: Practices, Controversies, and What Lies Ahead Reducing Wasteful Spending in Employers’ Pharmacy Benefit Plans ## What are pharmacy benefit managers and why are they under scrutiny? Pharmacy benefit managers, or PBMs, are companies that work with health insurers, large employers, and other payers to manage their prescription drug benefits. [...] PBMs operate at the center of a complex distribution chain for prescription drugs, connecting drug manufacturers, payers, pharmacies, and patients. PBMs perform many functions within this chain, such as: [...] In the 1960s, when U.S. insurers began integrating prescription drug coverage into their plans, PBMs emerged to help set reimbursement rates, process claims, and pay pharmacies. Since then, PBMs have become increasingly complex organizations with many lines of business, such as specialty and mail-order pharmacy services and group purchasing.