Pharmacy Benefit Managers (PBMs) Explained - Learn How the Money Flows

Summary

In this healthcare-focused video, Dr. Eric Bricker dissects the complex money flow within the Pharmacy Benefit Manager (PBM) industry. He outlines the key players, including plan sponsors, health plans, PBMs, drug manufacturers, wholesalers, pharmacies, and patients, and explains the financial transactions between them. The video emphasizes the importance of understanding the PBM's dual role as a service provider and a customer to both health plans and drug manufacturers, as well as the significance of transparency in rebates and other payments. Dr. Bricker also highlights the challenges employers face in navigating the PBM landscape, especially concerning specialty pharmacy medications, and the debate over the effectiveness of transparent pass-through PBMs and specialty pharmacy carve-out PBMs.

Takeaways

• 🤔 The video aims to demystify the complex money flow within the Pharmacy Benefit Manager (PBM) industry.
• 💰 The money flow starts with the plan sponsor and goes through the health plan to the PBM, then to the pharmacy, wholesaler, and finally to the drug manufacturer.
• 🔄 The actual drugs flow from the manufacturer to the wholesaler, then to the pharmacy, and ultimately to the patient.
• 💊 The PBM acts as an intermediary, receiving money from both the health plan and the drug manufacturers, and is influenced by rebates and other payments.
• 💼 The PBM has two customers: the health plan and the drug manufacturer, which can create conflicts of interest.
• 🏥 The plan sponsor receives some rebates back from the PBM, which can offset the administrative fees they pay for prescription management.
• 💊 Drug manufacturers also make additional payments to PBMs, such as formulary payments, market penetration payments, and bonus payments.
• 💼 The video emphasizes the importance of transparency in the PBM industry, especially regarding payments from drug manufacturers.
• 💊 Specialty pharmacy medications are particularly expensive, leading to co-pay assistance programs funded by drug manufacturers to reduce patient out-of-pocket costs.
• 🏢 The script suggests that understanding the PBM ecosystem is crucial for employee benefits professionals and plan sponsors.
• 🤝 The debate over whether to have a transparent pass-through PBM or a specialty pharmacy carve-out PBM is a contentious issue with differing viewpoints in the industry.

Q & A

What is the main topic of Dr. Eric Bricker's video?

The main topic of the video is the explanation of the money flow within the Pharmaceutical Benefit Manager (PBM) industry.

What does Dr. Bricker suggest should be the goal for those working in employee benefits regarding the PBM money flow chart?

Dr. Bricker suggests that the goal should be to understand the flowchart well enough to reproduce it on a napkin and explain it in plain English to someone who is not in benefits.

How many key players or actors are involved in the PBM money flow according to the video?

There are seven key players involved in the PBM money flow: the plan sponsor, the health plan, the PBM, the drug manufacturer, the wholesaler, the pharmacy, and the patient.

What is the starting point for the money flow in the PBM industry as explained in the video?

The money flow in the PBM industry starts with the plan sponsor, who has the ultimate control and makes the rules.

What is the role of the PBM in the money flow process?

The PBM acts as an intermediary, receiving money from the health plan and using it to pay the pharmacy for prescriptions, while also negotiating rebates and other payments from the drug manufacturers.

What are the types of payments the PBM receives from the drug manufacturers?

The PBM receives rebates, formulary payments, market penetration payments, and bonus payments from the drug manufacturers.

How does the drug manufacturer assist patients with the cost of specialty pharmacy medications?

The drug manufacturer provides co-pay assistance programs to help patients with the high out-of-pocket costs associated with specialty pharmacy medications.

What is the significance of the term 'transparent PBM' mentioned in the video?

A 'transparent PBM' refers to a PBM that openly discloses its practices, including the details of the rebates and other payments it receives from drug manufacturers.

Why is the PBM's relationship with both the health plan and the drug manufacturer important to understand?

Understanding this dual relationship is important because it highlights the PBM's role as a service provider to both customers and the potential conflicts of interest that may arise from it.

What are the implications of having a few major wholesalers and PBMs controlling the market?

The implications include limited options for the pharmacy and the health plan, which can lead to oligopolistic practices and potentially higher costs.

What is the role of the patient in the PBM money flow process?

The patient's role is to pay the premium to the health plan, which includes coverage for prescription medications, and to pay co-payments or co-insurance for the medications they receive from the pharmacy.