Employers are increasingly being pushed in numerous directions when it comes to employee perks. Maintaining employee engagement and happiness while keeping expenditures in check is a significant challenge for many organizations. This is no small task, especially regarding the rising benefits costs.
Pharmacy benefits are the most often utilized benefit in your plan, and they are also the fastest rising in terms of cost. Therefore, choosing the proper pharmacy benefit manager (PBM) is critical if you want to keep your customers satisfied while also keeping your expenditures in check.
PBMs significantly impact prescription drug pricing, perhaps one of their significant advantages. According to estimates, three big brands—CVS Caremark, United Healthcare’s OptumRx, and Express Scripts—control at least 80 to 85 percent of the market.
Their position in the market gives these enterprises considerable leverage in bargaining lower prices from pharmaceutical corporations. These talks may also lead to a rise in the usage of generics, which lowers the overall costs for plans and the out-of-pocket payments for members of those plans.
Pharmacy Benefit Managers (PBMs) act as your advocates and help consumers and payers reduce prescription drug costs in the healthcare system.
Pharmaceutical benefit managers (PBMs) oversee the prescription drug plans of over 266 million Americans who have health insurance through a variety of different sources such as commercial health plans, self-insured employer plans, union-backed plans, Medicare Part D plans, the Federal Employees Health Benefits Program (FEHBP), state government employee plans, and managed Medicaid plans. A PBM’s savings on prescriptions over the next decade will exceed $1 trillion for health plans and their members.
A person who oversees a pharmacy benefit program is referred to as a pharmacy benefit manager (PBM). PBMs, also known as pharmacy benefit managers, are essential to the healthcare system. Contracts are signed with all of the key players in the pharmaceutical supply chain, from drug manufacturers and insurance companies to retail pharmacies. First, PBMs were formed to save insurance companies time handling prescription drug processing. PBMs were quick to see the potential for expansion. These services are now available to help people achieve their health goals and manage their medication costs.
Services offered by PBMs are extensive. In addition, there are many other options to mail-order pharmacies—automated machines package and label prescriptions after a pharmacist has verified them. The medications are then delivered to patients’ homes. Chronically ill patients with few other options will benefit from this feature. The formularies of PBMs, which are lists of pharmaceuticals covered by insurance, are also constructed by PBMs. If you have an insurance plan, formularies determine how much you will have to pay for your prescriptions. That is to say, PBMs determine which drugs individuals should take by restricting their options. Because formulary prescriptions are the most affordable, doctors are more likely to prescribe them, even if they are not the best option for the patient. Is it good enough? The price isn’t essential, yet it is necessary.
One of the critical roles of pharmacy benefit managers is to negotiate contracts with pharmaceutical companies. With over 266 million customers, PBMs can take advantage of bulk discounts similar to those seen at Costco, as they serve such a large portion of the population. PBMs receive a rebate equal to a percentage of the drug’s cost from pharmaceutical manufacturers in exchange for their prescriptions being listed in the formulary of the PBM. It’s a win-win situation for everyone involved. Adding a medicine to a PBM’s form boosts revenue for both the manufacturer and the PBM. PBMs are encouraged by rebates to give preference to a specific drug manufacturer’s product. As a result, PBMs may choose to include the more expensive drug in their formulary because a more significant rebate equals a higher profit for the PBMs.
First, I’d like to discuss refunds as a whole. Another way, a rebate is a marketing ploy used to persuade customers to make a purchase. Consumers are responsible for the difference between what they paid and what they were reimbursed for.
Were you buying new tires for your car or a year’s supply of contact lenses? Have you ever sent in a rebate? Rebates for these products are standard. Where do you stand on vouchers? Do you use coupons to save money at the grocery store? Isn’t it time to save $1 on laundry detergent? If this is the case, you’ve also received a discount. What’s the harm in it?
Everybody wants to get their hands on the pharmaceutical rebate. A portion of the savings would benefit PBMs, health insurers, and consumers alike, all of whom feel it should be passed on to them in lower premiums and out-of-pocket costs.
As a result, the government proposes eliminating all prescription rebates, thus removing the need for expensive drugs. The rebate-free approach has not been tested in the real world. It is clear that the whole plan is flawed, but is the PBM solely to blame?
Do you think a satisfactory solution will be found? Given that three of the largest PBMs have been purchased or acquired by health insurers, we are likely to do so. CVS purchased Aetna, Cigna purchased Express Scripts, and United Healthcare purchased Optum.
Some innovative solutions may be developed due to this market shift and corporate strategy. To significantly lower the cost of medicines, these newly combined companies must put the customer first. With the help of providers and formularies built on the best value for consumers, PBMs can and will have an impact.