We recently addressed third party administrators that are hired by self-insured employers to process claims, also known as TPAs. Now, we’re here to explain a category of TPA called a pharmacy benefit manager, or PBM. A PBM is typically a TPA of prescription drug programs, tasked with the responsibility of processing and paying out prescription drug claims. Other responsibilities of a PBM include:
- Creating and updating the formulary (the list of medicines that may be prescribed)
- Contracting with pharmacies for patients and providers
- Negotiating prices, including discounts and rebates, with pharmaceutical manufacturers
Although this may be your first time hearing of them, PBMs are not uncommon at all; in fact, the majority of insured Americans receive prescription drug benefits that are administered by PBMs. Direct contracting companies like us like PBMs because we can help the pharmacy chains we contract with get better rates by negotiating with the PBM.
We can also discuss the prospect of our clients getting high quality, generic equivalent drugs and rebates, so that patients (covered employees who work for our employer clients) can get the medications they need at prices that are generally affordable for them. Likewise, our employer clients can pay a fairer price for prescription drug benefits so that their bottom lines will remain intact. This is just another benefit employers can take advantage of when they choose to use direct contracting for health insurance obligations. If you have any questions, feel free to contact GM&A today. We will be glad to explain the ways we can help employers like you negotiate pharmacy benefits.