What are Pharmacy Benefit Managers (PBMs) and What is Their Role?
Pharmacy benefit managers (PBMs) are paid third-party administrators of prescription drug coverage for insurers and employers. They provide a wide variety of services including developing and maintaining formularies, processing claims, and negotiating discounts and rebates between payers and manufacturers. PBMs manage plans for millions of Americans who have health insurance from a variety of sponsors including commercial health plans, self-insured employer plans, Medicare Part D plans, state government employee plans, and Medicaid managed care organization (MCO) plans.
Prescription drugs can dramatically improve one’s quality of life, with some therapies being the only thing separating a person from death—but the price for this innovation can come at a steep price. The Centers for Medicare & Medicaid Services (CMS) reports consumer purchases of prescription drugs totaled $369.7 billion in 2019. Consumers filled over 3.7 billion retail prescriptions in 2019, according to the Kaiser Family Foundation, although the Pharmaceutical Research and Manufacturers of America (PhRMA) estimates that number to be much higher. The majority—approximately three-quarters of prescriptions—are processed by a pharmacy benefit manager (PBM). Historically, state laws focused on the role of other actors in the supply chain, but more attention is now being drawn to the role of PBMs.
Legislators may consider a wide variety of policy options when it comes to pharmacy benefit managers (PBMs). With this new 50-state web resource, you can research and access links to state laws in 12 categories of legislation related to PBMs.