PBM Tools

PBM Tools Will Save Health Plan Sponsors and Consumers More than $1 Trillion on Prescription Drug Costs

As prescription drug spending continues to increase, research shows PBMs’ cost savings and patient care management tools should reduce prescription drug costs for health plan sponsors and consumers by an average of 20 percent.

RESEARCH SHOWS US

From 2020 to 2029, the current use of PBM tools will save health plan sponsors and and consumers more than $1 trillion.

PBM tools have generated significant savings for the Medicare prescription drug program. Even greater savings are expected in the future:

$512 B

Commercial health plan sponsors and their members will save more than $512 billion.

$445 B

Medicare Part D and its beneficiaries will save more than $445 billion.

$46 B

Managed Medicaid plans will save more than $46 billion.

PBM tools

How PBMs Reduce Rx Costs for Patients and Payers:

Negotiating Rebates from Drug Manufacturers

PBMs negotiate rebates from manufacturers of brand-name drugs that compete with therapeutically similar brands and generics. Manufacturers typically provide a rebate if their product is “preferred,” which means it is assigned a copay lower than that of competing products.

Negotiating Discounts from Drugstores

Retail pharmacies provide discounts to be included in a plan’s pharmacy network. The more selective the network, the greater the discount, because each pharmacy will gain more business.

Offering More Affordable Pharmacy Channels

Mail-service and specialty pharmacy channels typically give plan sponsors deeper discounts than do retail pharmacies. These channels also help encourage the use of preferred products for additional savings.

Reducing Waste

PBMs use Drug Utilization Review and other utilization management programs to reduce over-utilization and waste, as well as reducing adverse drug events associated with polypharmacy.

Encouraging Use of Generics and Affordable Brands

PBMs use several tools to encourage the use of generic drugs and preferred brands. These include formularies and tiered cost sharing, prior authorization and step-therapy protocols, generic incentives, consumer education, and physician outreach. As PBMs and plan sponsors strive for greater savings, drug mix becomes even more important.

Improving Adherence

PBMs implement medication adherence programs and care management programs to help patients with chronic disease stick to their prescription regimens. These programs improve clinical outcomes and often increase prescription volume and expenditures.

Managing High-Cost Specialty Medications

PBMs combine savings from all the above categories with the unique capabilities of specialty pharmacies in safely storing, handling, and delivering complex, often injectable, medications that cost thousands per dose and in providing effective patient education, monitoring, and support for patients with complex conditions, such as hepatitis C, multiple sclerosis, and cancer.

Negotiating Rebates from Drug Manufacturers: PBMs negotiate rebates from manufacturers of brand-name drugs that compete with therapeutically similar brands and generics. Manufacturers typically provide a rebate if their product is “preferred,” which means it is assigned a copay lower than that of competing products.

Negotiating Discounts from Drugstores: Retail pharmacies provide discounts to be included in a plan’s pharmacy network. The more selective the network, the greater the discount, because each pharmacy will gain more business.

Offering More Affordable Pharmacy Channels: Mail-service and specialty pharmacy channels typically give plan sponsors deeper discounts than do retail pharmacies. These channels also help encourage the use of preferred products for additional savings.

Encouraging Use of Generics and Affordable Brands: PBMs use several tools to encourage the use of generic drugs and preferred brands. These include formularies and tiered cost sharing, prior authorization and step-therapy protocols, generic incentives, consumer education, and physician outreach. As PBMs and plan sponsors strive for greater savings, drug mix becomes even more important.

Reducing Waste: PBMs use Drug Utilization Review and other utilization management programs to reduce over-utilization and waste, as well as reducing adverse drug events associated with polypharmacy.

Improving Adherence: PBMs implement medication adherence programs and care management programs to help patients with chronic disease stick to their prescription regimens. These programs improve clinical outcomes and often increase prescription volume and expenditures.

Managing High-Cost Specialty Medications: PBMs combine savings from all the above categories with the unique capabilities of specialty pharmacies in safely storing, handling, and delivering complex, often injectable, medications that cost thousands per dose and in providing effective patient education, monitoring, and support for patients with complex conditions, such as hepatitis C, multiple sclerosis, and cancer.

Why PBMs?

PBMs increase access and lower Rx costs for 266 million patients with health coverage provided by commercial health plans, self-insured employer plans, union plans, Medicare Part D plans, the Federal Employees Health Benefits Program (FEHBP), state government employee plans, Medicaid plans, and others.

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