A PBM, or Pharmacy Benefit Manager, is a company that manages prescription drug benefits on behalf of health insurance providers and employers. They work to negotiate drug prices, choose which drugs will be covered by insurance, and handle the processing of drug claims. Essentially, they act as a middleman between insurers, drug companies, and pharmacies.
PBMs are for-profit companies that “manage” prescription drug benefits for more than 266 million Americans on behalf of payers, including private insurers, Medicare Part D drug plans, government employee plans, large employers, and Medicaid Managed Care Organizations (MCOs).
PBMs help payers:
- Create a list of covered drugs for plans (“a formulary”);
- Manage drug utilization by enrollees (e.g., by setting copays, prior authorization policies, etc.);
- Reimburse pharmacies for providing the enrollee drugs.