Magazine article Drug Topics

PBMs Emerging as Key Element in Managed Care

Magazine article Drug Topics

PBMs Emerging as Key Element in Managed Care

Article excerpt

The general public hardly knows what pharmaceutical benefit managers are--or even that they exist. Yet, without much fanfare, PBMs are affecting the way millions of Americans receive drug treatment, and their influence will increase dramatically for the rest of this decade. They are changing forever the way drugs are retailed, and they determine which drugs will flourish in the market and which will wane. They will, in the near future, help decide whether certain diseases are best treated by drugs, surgery, or some other modality.

PBMs got a shot in the arm during the 1980s, as the big third-party payers revolted against the explosive growth in health-care costs. What they came up with, in many cases, was managed care. This year, the number of Americans enrolled in managed care plans will reach 57.2 million, and by the end of this decade "virtually all U.S. lives will be enrolled in a managed care plan," according to a study titled Perspective on Pharmaceutical Benefit Management, issued by SmithKline Beecham.

A key element in managed care is the PBM, which controls pharmaceutical costs by putting together networks of pharmacy providers (often restricted, it should be pointed out), negotiating pharmacy dispensing fees, developing drug formularies, and performing outcomes analysis.

Through the magic of the computer network, PBMs track in "real terms" which drug the pharmacy is dispensing to a participating patient, monitor physician compliance with the formulary, and keep tabs on patient cooperation with the treatment.

The trend in formularies is to move from voluntary guidelines to mandatory compliance, using a restricted list of drugs. This evolution will lead, in short order, to PBMs' ability "to negotiate contracts that provide pharmaceuticals on a capitated basis"--first for individual drugs and then for entire therapeutic classes. Capitation--which involves paying a fixed charge per covered life, regardless of the amount of the drug(s) actually used by any given patient--stands the pharmaceutical industry on its head. Traditionally, drug manufacturers have tried to maximize the amount of their drugs prescribed by doctors (and filled by patients), because the drugmaker was paid more if it sold more. …

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