PBM Primer Series (3 of 5)

Pharmacy Benefit Managers Info Series Part Three
Thanks for following along with our five-part email series on Pharmacy Benefit Managers. Last week we discussed what PBM’s are supposed to do versus what they’re actually doing. What’s going on behind the scenes definitely feeds into this week’s topic – how PBM’s affect your ability to provide healthcare to your patients.

We already learned that PBM’s handle many facets of the prescription drug market, with the biggest three, Express Scripts, CVS Caremark, and OptumRx controlling approximately 89% of the market, as of NAIC figures from 2022. A cursory glance at their systems might not make it seem as though they have too much bearing on physicians/providers, however, their negotiations with manufacturers and pharmacies end up being leveraged, leaving both providers and patients paying literal and figurative prices. So, how does a PBM affect your ability to provide healthcare to your patients?

A significant component of what PBM’s control is the drug formulary – a list of prescription drugs covered by a prescription drug plan. This control essentially dictates which drugs doctors and pharmacists are allowed to give consumers and under what circumstances. PBM’s are neither doctors nor pharmacists, but somehow they get to influence these decisions regarding prescribed patient therapy. This is mainly due to whether they get what they want from manufacturers. Originally, manufacturer rebates to PBM’s were relatively low (1-3%), their drugs were essentially guaranteed to be on plan formularies, and there was no tiering – ultimately the choice of drug was left to providers and patients. Then, in 2010, PBM’s started demanding higher rebates from manufacturers, which they had to pay to continue having their products included in plans, basically “paying for preference.”

Manufacturers simply cannot fight the current PBM system, which makes triple the revenue (in billions) in comparison. If they don’t “play ball,” their drugs might be placed on a lower tier where it’s hard for providers to use the products, or they can be removed from formularies altogether. If a needed drug therapy is unavailable for a physician to prescribe, how can the best possible care be provided to a patient? These barriers simply shouldn’t exist, especially not at the cost of providers having little to no access or oversight to prescribe the drug therapies patients might need. There are also additional barriers on the patient-access side, which will be our topic for the next email.
This incredibly informative video lecture from Palm Beach County Medical Society & Services is geared toward providers who want to become more informed on how to make changes in the PBM system. We can provide a transcript on request.
We hope you’ll continue to follow along as we finish gathering the facts to take necessary steps toward the goal of PBM system reform.