What are PBMs?
Pharmacy benefit managers (PBMs) are companies hired by insurers to manage drug benefit programs. They essentially act as middlemen between insurers, manufacturers, and pharmacies and thus have a uniquely central role in the drug market, handling everything from setting patient copayment amounts to determining which drugs are covered by which health plans.
Unmasking the Middlemen
While PBMs were originally set up to control drug utilization and cost, they have since become incredibly effective at negotiating discounts and rebates from manufacturers that they keep for themselves as profits rather than passing those savings onto patients. As a result, patients are paying cost shares that do not reflect the actual lower cost of the drug, which drives up out-of-pocket costs and co-pays. In some cases, PBMs may also push manufacturers to increase their drug’s list price in order to be included on formularies.