Pharmacy benefit managers a growing force in Medicare

States investigate these companies' practices, while PBMs point out the savings they provide to the health system.

By Joel B. Finkelstein, AMNews staff. Aug. 2, 2004.

Washington -- Pharmacy benefit managers are coming under increasing scrutiny by the states just when the federal government is expected to turn to them to administer the new Medicare drug benefit.

PBMs have arisen as a market force at a time when high prescription drug costs are increasingly becoming a concern for patients and physicians. The affordability problem is especially acute among seniors, who are more likely to have chronic conditions often requiring multiple medications. These worries helped drive passage last year of the Medicare outpatient drug benefit.

PBMs design formularies and pay claims, but the drugs are still distributed to patients by local or mail-order pharmacies. Pharmacy benefit managers are to drugs what managed care companies are to doctors and hospitals.

And like managed care companies, PBMs have generated concern among some consumer advocates that cost-cutting strategies can go too far, potentially undermining patient care. Many of the companies have developed strategies to change patients to alternative drugs, reportedly without the patient's or the physician's consent in some cases.

Additionally, pharmacists are being bogged down in the paperwork required by PBMs and have less time to act as effective liaisons between physicians and patients, said Susan Winckler, vice president of policy and communications at the American Pharmacists Assn.

Nevertheless, pharmacy benefit managers are expected to administer the Medicare drug benefit when it is launched in 2006. PBMs have the experience, said a spokesman for the Centers for Medicare & Medicaid Services.