A Pharmacy Benefit Manager, or "PBM" is a company that administrates prescription drug programs for payers like your insurer. Their job is important to keeping patients safe and controlling the costs of prescription drugs.
PBMs do two things that are of vital importance to health care consumers.
- They determine "formularies" - basically what drugs will a plan cover and what will they not. This is an important check in the system to ensure that medical decisions are made based on the best science and value - not pharmaceutical marketing campaigns.
- They negotiate price on behalf of patients.
This last point is particularly important to health care costs. A patient who needs life-saving medication does not want to be put in the position of negotiating price at the point of purchase.
PBMs negotiate prices for all covered drugs ahead of time with the pharmaceutical companies to help keep out of pocket costs and insurance premiums under control.