Rx Solutions

To fully understand the role of a pharmacy benefit manager (PBM), you need to consider the processes involved in determining prescription drug costs.

In general, the pricing of a prescription drug that patients buy can depend on a number of factors, from the drug manufacturers producing them to your insurer’s negotiated conditions, and the chosen PBM. The final drug prices will be influenced by the formulary in your health plan and supplementary benefit programs. Prices are also influenced by the list of covered specialty drugs and conditions negotiated with the manufacturer, including a potential rebate.

The entire process requires you to stay up to date on a range of ever-changing conditions and collaborate with different business partners, from pharmacy networks to health insurers. That’s where PBMs come in. Their experience with legal details, contract conditions, and common drug pricing patterns allows them to function as an intermediary between you and the pharmaceutical market. This can result in significant cost savings for you.

Since they serve clients such as yourself regularly, they can also use their leverage to negotiate better contract conditions with suppliers. That means they can offer discounted prescription medications and save money by analyzing your existing contracts and renegotiating with manufacturers.

While a pharmacy benefit manager and your insurance company fulfill organizational tasks in dealing with your prescription drugs, they are not the same.

In the case of your prescription medications, your insurance company first assesses risks and the medical needs of those involved. Then, the insurer charges an insurance rate that reflects its risk assessment to provide coverage for potential treatments and drug costs or additional expenses resulting from loss of income as part of a comprehensive health insurance package.

The pharmacy benefit manager, on the other hand, serves a tiny niche of that broad healthcare offering. They negotiate the conditions between each medication manufacturer and insurers. Later, the PBM is also involved in processing and paying prescription drug claims.

So when evaluating your PBM’s effectiveness it’s crucial to have objective measuring points to evaluate their performance over time. In most cases, you’re looking for more cost-effective medication, access to higher tiers in your health plan, or faster admission to the appropriate therapy. Sometimes, these offerings may be combined with specialist consulting services, contract reviews, or formulary optimization.