Pharmacy Benefits Managers (also known as PBMs) are, in essence, the intermediaries who facilitate practically every aspect of the pharmacy benefits industry. They are also known as third-party administrators. Many individuals believe that pharmacy benefits are provided directly by their health insurance carrier, but in truth, pharmacy benefit managers (PBMs) handle the majority of the work.
What are pharmacy benefit managers?
Alternatively known as PBMs, these companies handle prescription medication benefits on behalf of health insurers, Medicare Part D drug plans, major employers and other payers. They are also known as pharmacy benefit managers (or PBMs). Pharmaceutical benefit managers (PBMs) have a substantial impact on drug costs for insurers by negotiating with drug manufacturers and pharmacies to control drug spending. They also influence patient access to drugs and the amount of money that pharmacies are paid. PBMs have come under increasing attention as a result of their participation in the rise in prescription drug prices and spending.
What impact do PBMs have on our prescription drug spending?
PBMs are companies that operate in the midst of the prescription drug delivery chain. This is as a result of the following:
· Create and manage lists of covered prescriptions (called formularies) on behalf of health insurers, which impact which medications people take and how much they have to pay out-of-pocket for prescription drugs.
· They take advantage of their purchasing power to negotiate rebates and discounts with pharmaceutical companies.
· Establish direct relationships with individual pharmacies in order to reimburse them for medications provided to beneficiaries.
The federal Centers for Medicare and Medicaid Services discovered that PBMs' capacity to negotiate greater rebates from manufacturers has contributed to reduced prescription prices and a slowing of the growth of drug spending over the previous three years, according to their findings. However, pharmacy benefit managers (PBMs) may have an incentive to promote expensive pharmaceuticals over drugs that are more cost-effective. Given that they frequently receive rebates that are based on a percentage of the manufacturer's list price, PBMs typically receive a bigger refund for costlier pharmaceuticals than they do for drugs that may give greater value at a lower cost. Because of this, consumers who have a high-deductible plan or copays based on the list price of medicine may have higher out-of-pocket expenses.
What’s the controversy over the rebates PBMs receive from drug companies?
Drug manufacturers claim that the increasing amount of rebates they pay to pharmacy benefit managers (PBMs) is causing them to raise the list prices of their goods. Manufacturer rebates to pharmacy benefit managers (PBMs) climbed from $39.7 billion in 2012 to $89.5 billion in 2016, according to a recent report. Manufacturer rebates largely offset list price hikes. PBMs argue that they have been passing on a bigger share of rebates to insurers in recent years.
Another point of contention concerns a PBM practice known as "spread pricing," in which PBMs are reimbursed by health plans and employers at a higher price for generic pharmaceuticals than the prices that the PBMs actually pay pharmacies for these drugs. The PBMs then keep the difference between the two amounts. Once again, a lack of transparency permits this to occur: the payment schedules generated by pharmacy benefit managers (PBMs) are kept hidden from healthcare providers.
What reforms have been proposed to regulate PBMs?
Three major measures have been explored by policymakers in order to regulate PBMS.
- Require greater transparency around rebates. Federal and state officials may require additional information on the rebates PBMs receive in order to better understand pharmaceutical spending and where reforms may be necessary.
- Ban spread pricing. To ensure that PBMs are not overcharging payers and employers for prescription medications, policymakers might prohibit the practice. It is possible to reduce the scope of this proposal to only require PBMs to incorporate generic medicine price increases in their cost schedules with pharmacies.
- Payers or patients should be the beneficiaries of PBM rebates. PBMs could be obliged to pass through 90 percent of the rebate savings they receive from drug manufacturers in order to maintain some of their incentive to negotiate price reductions with drug manufacturers. Instead, PBMs could be forced to pass rebates along to patients. PBMs contracted with Medicare Part D plans would be required to pass through to patients at least one-third of the rebates and price concessions that they earn from the government, according to a proposal by the federal government.
Some analysts believe that PBMs must likewise realign their business models away from securing rebates and toward enhancing the value of pharmaceutical spending in order to remain competitive. Health plans and pharmacy benefit managers (PBMs) may, for example, do more to assist physicians in prescribing the most cost-effective prescriptions available on their patients' formularies. Furthermore, PBMs could base formulary selections and pricing negotiations on a drug's health benefits as well as its impact on the overall cost of patient care.
Hospice care and long-term care should not be onerous; care providers should be able to easily purchase the drugs and prescriptions they need for their patients without having to worry about expensive prices, delayed service, or inadequate customer support. And we're making it all happen at Spectrum Pharmacy Solutions by pledging to be your long-term, trustworthy, and experienced partner.
