These tools enable the real-time exchange of patient-specific formulary and benefit information between prescribers and PBMs at the time of prescription. RTBTs enable prescribers to know, when prescribing, how much a drug will cost the patient given their coverage, including their status in their deductible or other phase of their benefits. The use of RTBT saves patients up to 40%.

A rebate aggregator is an entity that provides formulary rebate administrative services for PBMs or otherwise aggregates purchasing volume to negotiates rebates with manufacturers.

Drug rebates are price concessions negotiated by PBMs with drug companies to reduce the net, or true, cost of providing prescription drug coverage. Typically, rebates are paid by brand drug manufacturers to PBMs who then share the negotiated rebates, in whole or in large part, with the plan sponsors. In the Medicare Part D market, 99.6% of rebates are passed back to Part D plan sponsors, and in the commercial market, 91% of rebates are passed on to plan sponsors.

A single biological product, already approved by FDA, against which a proposed biosimilar product is compared.

The process where businesses solicit proposals for the services they desire. Private industry plan sponsors typically shop for PBMs using benefits consultants that help construct detailed RFPs regarding the sponsor’s desired pharmacy benefit design. PBMs compete for this business and tailor their offerings to meet the plan sponsors’ needs. In the public space, federal and state programs issue RFPs, and PBMs compete in much the same way either directly or as subcontractors to the plan sponsor.

These are pharmacies that directly dispense medications to the general public at retail prices. Retail pharmacies can be independent or part of a chain. (also called Community Pharmacy)

A statistical process that accounts for the underlying health status (e.g., age, social determinants) and health spending of enrollees in a plan when assessing their health care outcomes and costs. Risk adjustment provides a methodology to adjust for these factors to better measure the quality of care and the appropriate payment rates.

A Risk Evaluation and Mitigation Strategy (REMS) is a drug safety program that the U.S. Food and Drug Administration (FDA) can require for certain medications with serious safety concerns to help ensure the benefits of the medication outweigh its risks. PBMs may support REMS by collecting data and reporting to the FDA as a service to drug manufacturers.