PBM Resources

Pharmacy Benefit Managers, often known simply as "PBMs," are largely unrecognized by most employees—and even by many employers and human resource managers. But they have a tremendous impact on U.S. health care decision-making because they influence more than 80 percent of drug coverage.

The information in this section is intended to summarize controversial PBM practices, provide a record of NCPA's efforts regarding PBMs as well as any bills that have been introduced or any laws that have been passed on a state level regarding their practices.

Don't let the insurance company middlemen inflate costs and reduce the quality of health care. Support Federal and state efforts to regulate PBMs, as well as halt mandatory mail order in its tracks. Model state legislation, a listing of state laws concerning PBMs, a listing of lawsuits involving them and other resources are available for your use.

"They aren't loyal customers. They're hostages, and they don't like it."

J.D. Power and Associates official describing patients in mandatory mail order pharmacy plans, Drug Topics article, Mar. 2010.

A Brief History

In the 1970s, coverage for prescription drugs began to emerge as an add-on to health insurance policies. PBMs started out as paper claims adjudicators and by the 1980s began to offer those services online in real time.

From that humble beginning, PBMs have grown into multi-billion middlemen and direct competitors to community pharmacies, beholden to Wall Street and not the people on Main Street and the pharmacies that serve them.

They tell physicians what drugs they can prescribe (a list of approved drugs known as formularies).

They extract money from drug manufacturers for putting their drugs on the formulary (rebates).

They tell patients what pharmacies they can patronize (restricted networks). They tell pharmacies how many pills they can dispense (usually a 30-day supply, while the PBM-owned mail order arm can dispense 90-day supplies).

They also dictate how much pharmacies will be paid for the drugs they dispense regardless of their acquisition costs (take-it-or-leave-it contracts).