Pharmacy Benefit Management


Pharmacy Benefit Management

A Pharmacy Benefit Manager (PBM) is a third party administrator of prescription drug programs. They are primarily responsible for processing and paying prescription drug claims. They also are responsible for developing and maintaining the formulary, contracting with pharmacies, and negotiating discounts and rebates with drug manufacturers.

Due to their larger purchasing pool for prescription drugs, PBMs can negotiate rebates and discounts on behalf of their clients. However, in recent years, lawsuits filed by the federal and state governments and by PBM clients have alleged that PBMs have been operating against their clients' interests -- and breaching their fiduciary duties to their clients -- by secretly retaining rebates and discounts that the PBMs were obligated to pass through to their clients.

PBMs also often have the ability to offer initiatives that give value and flexibility to participants, such as tablet splitting, sampling and mail order service.

PBMs operate on different "business models". Most PBMs implement "spread pricing", meaning PBMs execute contracts with their clients allowing the PBMs to purchase drugs at lower prices, but invoice their clients at higher prices, thus profiting from a "spread" in the pricing. A few PBMs implement "pass through pricing". These PBMs execute contracts with their clients that require the PBMs to "pass through" to their clients the PBM's precise purchase or reimbursement drug cost. These PBMs generate their profits by charging a flat, per claim, or per member, administrative fee. From an organizational perspective, PBMs can be "captive", in that they are part of a larger organizational pharmacy or buyer, such as Caremark (which is captive to CVS Caremark) , Walgreens Health Services (which is captive to Walgreens), and Immediate Pharmaceutical Services (which is captive to Discount Drug Mart) or they can be independent entities, such as Medco Health Solutions or Express Scripts. Some PBMs are part of larger managed care organizations such as Prescription Solutions (which is a subsidiary of UnitedHealth Group.)

From a strategic perspective, PBMs can be "carved-out", in that they were hired directly by an employee's company to provide PBM services, or "carved-in", in that they were hired to be an employee's company through a MCO or HMO.

Many PBMs are currently working towards establishing Consumer Directed Health plans, which are essentially health savings accounts, in an attempt to shift the awareness of drug purchases to the customer.


Wikimedia Foundation. 2010.

Look at other dictionaries:

  • Oncology benefit management — Due to the multiple components of health care management claims (data processing), treatment, diagnoses, drug administration, etc. it[clarification needed] requires sophisticated technology and coverage to be effective. As seen by the various… …   Wikipedia

  • Pharmacy — For other uses, see Pharmacy (disambiguation). The mortar and pestle, one of the internationally recognized symbols to represent the pharmacy profession …   Wikipedia

  • Pharmacy informatics — Definition of Pharmacy Informatics = Pharmacy informatics, also referred to as pharmacoinformatics, is the application of computers to the storage, retrieval and analysis of drug and prescription information. Pharmacy informaticists work with… …   Wikipedia

  • CVS Pharmacy — Type Public Subsidiary Industry Retail Founded Lowell, Massachusetts …   Wikipedia

  • CVS/pharmacy — Infobox Company company name =CVS/pharmacy company company type = Subsidiary of CVS Caremark foundation = May 8, 1963 company slogan = For All The Ways You Care location = Woonsocket, Rhode Island num employees = 80,000 (2005) products = Retail… …   Wikipedia

  • Evidence-based pharmacy in developing countries — Pharmaceutical services in developing countries face particular challenges that are significantly different from those faced by pharmacists in the so called developed world.Medicines that are normally restricted to prescription in the developed… …   Wikipedia

  • Medication therapy management — Intervention ICD 10 PCS GZ3 Medication therapy management (MTM) is a partnership of the pharmacist, the patient or their caregiver, and other health professionals that promotes the safe and effective use of medications and helps patients achieve… …   Wikipedia

  • Narsee Monjee Institute of Management Studies — Motto Trascending Horizons Established 1981 Type Deemed University Academ …   Wikipedia

  • Diabetes management — Main article: Diabetes mellitus Diabetes is a chronic disease with no cure as of 2010[update] but a lot of research is underway. It is associated with an impaired glucose cycle, altering metabolism. Management of this disease may include… …   Wikipedia

  • The Pharmacy Practice Research Trust — (PPRT) is an independent charity established in July 1999, by the Royal Pharmaceutical Society of Great Britain which supports and promotes the professional practice and development of pharmacists and develop the field of pharmacy practice… …   Wikipedia