The last few years have brought a substantial increase in legislative activity trying to limit the role of pharmacy benefit companies (also known as PBMs) in healthcare and the drug supply chain. While the impetus for the debate is lowering prescription drug prices, one thing is undoubtedly clear: proposed policy changes targeting PBMs will not lower drug prices and will not lead to lower out-of-pocket costs for patients.
You may ask, “Why are there so many misguided policies?” Partly because few people understand what PBMs do, who hires them, and their responsibilities in the healthcare industry.
As a pharmacist who worked filling prescriptions, counseling patients and working on every aspect of pharmacy benefits, I have a perspective on policy issues facing this industry and the members of Pharmaceutical Care Management Association, which represents America’s pharmacy benefit companies. I’ve seen how PBMs make drugs more affordable for patients and provide tools that aid doctors in making the best clinical decisions for patients.
Health plan sponsors, including employers, unions and government programs, voluntarily hire PBMs to navigate the complexities of the drug supply chain and support them in designing comprehensive and cost-effective prescription drug coverage. PBMs have a staff of doctors, pharmacists, nurses, supply chain managers and insurance experts who use their expertise to save plan sponsors money. PBMs work to secure discounts from drug companies and pharmacies, leading to lower drug costs. This process ensures patients have access to high-quality medications at the most affordable price.
Employers and other plan sponsors make decisions and set parameters that PBMs use to design drug benefits. Employers select the list of drugs they can afford to cover (formularies) and determine which pharmacies meet the needs of their employees (pharmacy networks). These complex decisions evaluate the unique needs of the employees and family members receiving that benefit.
A recent survey found nine out of 10 employers find PBMs valuable when designing their pharmacy benefits. Employers choose the benefit design option that works best for their situation, always having the opportunity to work with their PBM to adjust and tailor every aspect of the plan. From small businesses with just a few employees to multi-national corporations that employ thousands, the dynamic and competitive market of more than 70 PBMs can find a solution that makes prescription drug coverage affordable.
At the heart of the pharmacy benefits industry is a core mission to ensure that every patient has affordable access to the drugs they need, when and where they need them.
PBMs are successful in achieving significant cost savings for their patients and payers, enabling them to save more than $1,000 per person annually. This is made possible by employing various strategies, including direct engagement with drug companies that determine the list price of their drugs. In the same way that car manufacturers set the suggested retail price for their vehicles, drug companies set the list price for their drugs. PBMs use an effective approach of negotiating rebates with manufacturers, specifically for drugs with competition and high usage rates, to reduce the final cost. This proactive approach not only aids in reducing the cost of medication for patients but also fosters healthy competition among manufacturers, leading to better healthcare outcomes for all.
An average of 91 percent of rebates are passed back to employers and health plan sponsors, which are then used to drive down the overall costs of healthcare. Employers like rebates; most (90 percent) use the savings to improve their benefits offering, including lowering employee spending on care and enhancing coverage. It’s all up to the employer to determine what works best for the business and the people it covers.
PBM pharmacists are an essential part of ensuring that patients receive the best possible care. They review a patient’s clinical history during the dispensing process of any medication, which includes carefully reviewing prescriptions obtained from multiple providers or pharmacies. By coordinating care, PBM pharmacists can reduce medication errors and spot possible drug interactions to create a safer and more seamless experience for patients when they visit the pharmacy.
Considering the increasing challenges posed by an aging population and growing incidences of chronic diseases, we must work toward ensuring that patients have access to the necessary drugs at affordable costs. Pharmacy benefit companies are committed to advancing this by providing patients safe and effective therapies at lower costs. By working together, we can have a positive effect on the lives of patients and their families and help build healthier communities.
