Understanding Pharmacy Benefit Managers (PBMs)
Learn how PBMs influence your prescription costs and discover strategies to maximize your benefits
$528B
Annual prescription drug spending managed by PBMs
Source: PCMA Research15-30%
Average savings negotiated by PBMs
Source: GAO Report266M
Americans whose prescription benefits are managed by PBMs
Source: PBMI ReportRole of PBMs in Healthcare
| Role | Description | Impact | Examples |
|---|---|---|---|
| Price Negotiation | Negotiate drug prices with manufacturers and pharmacies | Can reduce drug costs by 15-30% | Bulk purchasing discounts, rebate agreements |
| Formulary Management | Determine which drugs are covered and their tier placement | Influences drug choices and costs | Preferred drug lists, step therapy requirements |
| Claims Processing | Process and pay prescription drug claims | Ensures accurate pricing and coverage | Real-time claim adjudication, eligibility verification |
| Pharmacy Network | Establish and manage pharmacy networks | Determines where you can fill prescriptions | Preferred pharmacies, specialty pharmacies |
Note: Actual savings and impact may vary by PBM and plan. Check your specific plan details for more information.
Common Mistakes to Avoid
Not Using Preferred Pharmacies
Many people don't check if their pharmacy is in their PBM's preferred network.
Impact: Can pay 20-40% more for prescriptions
Solution: Use your PBM's pharmacy finder tool to locate preferred pharmacies
Ignoring Mail-Order Options
Not considering mail-order pharmacy for maintenance medications.
Impact: Missing out on potential 30-50% savings
Solution: Check mail-order pricing for medications you take regularly
Skipping Prior Authorization
Starting medications without getting required prior authorization from PBM.
Impact: Full out-of-pocket costs for prescriptions
Solution: Work with your doctor to submit authorization before filling prescriptions
Not Appealing Denials
Accepting coverage denials without appealing.
Impact: Paying full price unnecessarily
Solution: Learn your PBM's appeals process and work with your doctor
Frequently Asked Questions
What is a Pharmacy Benefit Manager (PBM)?
A Pharmacy Benefit Manager (PBM) is a company that manages prescription drug benefits on behalf of health insurers and employers. They negotiate prices with drug manufacturers and pharmacies, process prescription drug claims, and manage formularies to help control costs.
How do PBMs affect my prescription costs?
PBMs influence your prescription costs by negotiating prices, determining which drugs are covered by your insurance (formulary), setting copayments and coinsurance amounts, and establishing networks of preferred pharmacies where you can get better prices.
What are drug rebates and how do they work?
Drug rebates are refunds that pharmaceutical manufacturers pay to PBMs after a drug is purchased. These rebates are typically negotiated based on volume and can significantly affect which drugs are placed on preferred tiers in the formulary.
How can I save money on prescriptions with a PBM?
To save money, use preferred pharmacies in your PBM's network, choose generic drugs when available, ask about mail-order options for maintenance medications, and check if your medications require prior authorization or have alternatives on lower cost tiers.
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