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.[1][2] 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).[1]

The role of pharmacy benefit managers includes managing formularies, maintaining a pharmacy network, setting up rebate payments to pharmacies, processing prescription drug claims, and managing drug use. PBMs play a role as the middlemen between pharmacies, drug manufacturers, wholesalers, and health insurance plan companies.[3]

As of 2023, PBMs managed pharmacy benefits for 275 million Americans. As of 2023, 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 and cover approximately 270 million people.[4][5]

This consolidation and concentration has led to lawsuits and bipartisan criticism for unfair business practices.[6][7] By 2024, The New York Times,[8] Federal Trade Commission,[9][10] and many states Attorneys General[11][12] have accused pharmacy benefit managers of unfairly raising prices on drugs.

  1. ^ a b Feldman, Brian S. (March 17, 2016). "Big pharmacies are dismantling the industry that keeps US drug costs even sort-of under control". Quartz. Retrieved March 29, 2016.
  2. ^ Gryta, Thomas. "What is a 'Pharmacy Benefit Manager?'". Wall Street Journal. ISSN 0099-9660. Retrieved March 29, 2016.
  3. ^ Mattingly, T. Joseph, II; Hyman, David A.; Bai, Ge (November 3, 2023). "Pharmacy Benefit Managers: History, Business Practices, Economics, and Policy". JAMA Health Forum. 4 (11): e233804. doi:10.1001/jamahealthforum.2023.3804. ISSN 2689-0186.{{cite journal}}: CS1 maint: multiple names: authors list (link)
  4. ^ "Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies". Federal Trade Commission. July 9, 2024. Retrieved November 18, 2024.
  5. ^ "5 Things to Know About PBMs' Influence on Drug Costs and Access". AJMC. August 2, 2024. Retrieved November 18, 2024.
  6. ^ Cite error: The named reference :7 was invoked but never defined (see the help page).
  7. ^ Gibson, Kate (July 9, 2024). Lee, Anne Marie (ed.). "FTC says prescription middlemen are squeezing Main Street pharmacies". CBS News. Retrieved August 14, 2024.
  8. ^ Cite error: The named reference :1 was invoked but never defined (see the help page).
  9. ^ Weixel, Nathaniel (July 9, 2024). "FTC report slams pharmacy 'middlemen' for seemingly driving up prices, limiting access". The Hill.
  10. ^ Abelson, Reed; Robbins, Rebecca (July 8, 2024). "F.T.C. Slams Middlemen for High Drug Prices, Reversing Hands-off Approach". The New York Times.
  11. ^ Chatlani, Shalina (August 15, 2024). "To lower prescription drug costs, states head to the courthouse". Stateline (news). Retrieved August 18, 2024.
  12. ^ Cite error: The named reference :6 was invoked but never defined (see the help page).