What do pharmacy benefit management (PBM) organizations do?
Response: Pharmacy benefit management organizations work like a health plan for drugs/medications. They manage drug benefits on behalf of employers, negotiating preferred pricing for drugs, determining pharmacy networks, and developing and maintaining a “formulary”—the list of covered or preferred medications–with the goal of helping purchasers reduce costs. They can either work in partnership with a health plan to provide services, or can work as a stand-alone service. Employers use these services to lower costs because the cost of pharmaceuticals represents more than 12 percent of total health spending, a significant proportion of their total health expenditure.
