PBM MODEL & FACTS

What Consumers Need to Know:

There is an explanation why consumers are not seeing savings on their prescription drugs. M.I.P.A. is spreading awareness on the tactics a Pharmacy Benefit Manager uses to conceal these savings from consumers and pharmacies. The map below outlines this process.

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What is a PBM?

A Pharmacy Benefit Manager (PBM) manages prescription drug programs. PBM’s are third-party administrators between health plan sponsors and drug manufacturers. The initial intent of a PBM was to simplify and reduce costs throughout the prescription drug process. PBM’s are responsible for negotiating costs on prescription drugs with drug manufacturers to allow the pharmacy and health plan sponsors receive savings to pass along to consumers.

Why is a PBM Considered Unethical?

As a middleman, a PBM forms disclosed separate contracts with a pharmacy and with the health plan sponsor. Through the pharmacy contract, the PBM pays a pharmacy for every prescription drug dispensed plus a professional fee in order to dispense the drug. The health plan sponsor contract allows the PBM to charge the sponsor for each prescription completed by the pharmacy. This allows a PBM to differentiate pricing. PBM’s reimburse pharmacies less than what the health plan offers. The difference between what is paid to the pharmacy and charged to the health plan sponsor is pocketed by the PBM as profit. There is no standard pricing and it can vary from drug to drug.

How are PBM’s Affecting Independently Owned Pharmacies?

Independently owned pharmacies have the least amount of influence in working with a PBM. The contract between the pharmacy and PBM is non-negotiable. If the pharmacy disagrees with the reimbursement, they will be unable to serve their consumers. Mail-order programs are also a threat PBM’s push. The mail-order program eliminates the pharmacist and eventually puts the pharmacy out of business.

How are PBM’s affecting the consumer?

Consumer’s savings are pocketed by PBM’s as profit. This causes the consumer’s co-payments and health insurance to rise. The mail-order program puts the consumer at a safety risk by eliminating the face-to-face contact with a pharmacist to monitor medications. PBM’s also push physicians to prescribe particular drugs as much as possible to benefit the PBM’s overall volume sold. This causes the physician to ignore the consumer’s health care needs.

How PBM’s Profit

– Administration fees from plan sponsors
– Transaction fees from pharmacies
– Drug pricing rebates and other program fees from drug companies
– Mark up on drug pricing (also called network spread)
– Dispensing fees and mark up on drug pricing for prescriptions dispensed by mail-service and specialty pharmacy
– Unfair audit practices
– Self-serving network and formulary management
– Therapeutic switching