ABSTRACT
Contents Introduction ............................................................................................................................ 304 PBM Clients ........................................................................................................................... 305 Overview of PBM Activities .................................................................................................... 305 PBM Clinical Activities ........................................................................................................... 305
P&T Committee ................................................................................................................ 305 Drug Formulary: Creation and Management ...................................................................... 306 Pharmacy Benefit Design: Drug Formulary Tiers ................................................................ 307 Member Cost Sharing ......................................................................................................... 307
Utilization Management Tools ................................................................................................ 308 Prior Authorization ............................................................................................................. 308 Quantity Limits .................................................................................................................. 308 Step Therapy ....................................................................................................................... 308 Electronic Claims “Look Back”: Automatic Prior Authorization/Step Therapy .................... 309 Disease Management Programs ........................................................................................... 309
Cost Management Tools .......................................................................................................... 309 MAC Program for Generic Medications ............................................................................. 309 Pharmaceutical Manufacturer Contracting and Rebating .....................................................310 Medicaid Rebates .................................................................................................................310 Medicaid Unit Rebate Amount Calculation .........................................................................311
Specialty Pharmacy ...................................................................................................................311 Pharmacy Networks .................................................................................................................313
Introduction Pharmacy benefit management (PBM) companies are a lynchpin in the managed care pharmacy industry. They are responsible for processing and paying prescription medication claims on behalf of their clients (managed care organizations, employers, and government agencies), while providing services including developing and maintaining drug formularies, contracting with community and mail service pharmacies, and negotiating discounts and rebates with pharmaceutical manufacturers. PBMs aggregate the purchasing power of millions of enrollees on behalf of their clients, obtaining lower prices for their prescription medications through maximizing efficiencies in the medication distribution system. PBMs also implement and manage clinical pharmacy programs, which are used to reduce inappropriate prescribing by physicians, reduce medication errors, and improve member compliance.
