Pricing Market Strategy: Pharmaceutical Benefit Manager

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Suppose that you are a pharmaceutical benefit manager. First, briefly assess various pricing strategies that could be used to charge employers for prescription drugs. The first PBMs were created by managed care organizations in the 1980s to apply managed care principles, such as provider networks and patient co-pays, to the drug benefit portion of health care plans. Through rapid growth in the 1990s, PBMs “emerged as the national standard for the administration of prescription drug insurance in the United States.” The three largest PBMs manage drug benefits for over 200 million Americans 95% of Americans with prescription drug coverage. Today’s PBMs manage all aspects of a prescription drug benefit plan, including creating formularies of preferred medicines, negotiating with drug manufacturers for discounts and rebates, negotiating with pharmacies to establish retail networks for dispensing drugs, and establishing automated processes for determining (often called “adjudicating”) coverage eligibility at the point of sale (Prescription Policy Choices, 2008). Pharmaceutical benefit managers process prescriptions for the groups that pay for drugs, usually insurance companies or corporations, and use their size to negotiate with drug makers and pharmacies. Pharmacy benefit managers (PBMs) act as an intermediary between the payor and everyone else in the health-care system. They generally make money through service fees from large customer contracts for processing prescriptions, operating mail-order pharmacies, and negotiating with pharmacies and drug makers. Their contracts can include incentives for cutting costs. Pharmacy benefit managers (PBMs) use variety of pricing strategies. When employers have a thorough knowledge of those str... ... middle of paper ... ...rescribing practices to promote the best health outcomes. References: Prescription Policy Choices. (2008).Pharmacy Benefit Managers. Retrieved from: Kreling, David H. (2000, August 8.) Cost Control for Prescription Drug Programs: Pharmacy Benefit Manager (PBM) Efforts, Effects, and Implications. Retrieved from: Gryta, Thomas. ( 2011, July 21 ) What is a 'Pharmacy Benefit Manager? Retrieved from: Jones, John D. (First Quarter 2003): 14-18. Developing an effective generic prescription drug program. Retrieved from proquest on January 2014 at

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