How do pharmaceutical benefit managers help control healthcare costs?

Pharmaceutical benefit managers (PBMs) play a critical role in controlling healthcare costs primarily through negotiating drug prices and managing formularies. By leveraging their purchasing power and negotiating with drug manufacturers, PBMs can secure lower prices for medications, which helps to reduce overall drug spending for payers and patients alike.

Additionally, PBMs implement formularies, which are lists of covered medications that are categorized based on their cost-effectiveness and clinical efficacy. This management allows them to encourage the use of preferred medications, often generics or lower-cost alternatives, thereby controlling costs while ensuring patients have access to necessary treatments.

The effectiveness of PBMs in managing costs is evident as they often use strategies such as step therapy or prior authorization to optimize medication use and minimize expenditures. Ultimately, their ability to negotiate prices and effectively manage a formulary allows them to create a more sustainable healthcare system regarding drug costs.