The Affordable Care Act (ACA) established new Health Insurance Marketplaces, through which individuals and small business can purchase health coverage. No matter which state an individual lives in, all Marketplace health plan options must offer patients ten standardized categories of benefits — referred to as Essential Health Benefits (EHBs). Even some health plan options that are not offered through the Marketplaces are required to cover EHBs. EHBs include prescription drug coverage, physician services, inpatient and outpatient hospital care, mental health services, among others.

PBMs contract with health plans to implement prescription drug formularies and use private market tools, including drug price negotiation and pharmacy network design, to drive down prices for consumers and government payers.

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