What Is A Pharmacy Benefits Manager?

The cost of prescriptions is the fastest growing segment of healthcare cost in the United States, faster than hospital and physician costs combined. It is estimated that in 2015, prescription drug expenditures in the United Stated were approximately $457 billion, representing roughly 16.7% of the overall dollars spent on personal healthcare services.


A pharmacy benefits manager (PBM) is a third-party administrator (TPA) of prescription drug programs. PBMs are contracted by employers to provide prescription drug benefit management for their employees.


PBMs offer a variety of services including


Benefits to working with a PBM


Cost Savings

PBMs can reduce costs by negotiating discounts with pharmacies and offering cost effective options such as mail order fulfillment. PBM’s steer plan participants to more cost effective drugs through the use of a formulary.



Information & Insights

Employers have access to reports providing drug utilization information which aids in reducing waste and supporting patient adherence to the prescribed drug regimens.




PBMs make staying current with changes in the field of prescription drugs easy by keeping employers informed of industry changes in pricing, safety, efficacy and much more.


Choosing a PBM to help manage your prescription claims cost can be challenging. Knowing the right questions to ask PBM candidates will help you choose a PBM that can lower your prescription claims cost.


Questions to ask when selecting a PBM:


Frequently Asked Questions

Q: How will employee co-pays be managed?

A: Working with a PBM ensures that plan participants receive timely information outlining what co-payments to anticipate and who to contact with questions or assistance, if needed.

Q: How will I know when existing drugs are being transitioned to the generic category?

A: You can specify the frequency you would like prescription plan updates from your PBM – the more frequent the better, as the drug industry changes rapidly.

Want to Learn More?

Additional SmartSheet topics are available on the Educational Resources page.




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