AffirmedRx’s Role Explained: What We Do and What We Don’t
It’s no secret that the U.S. healthcare industry, and pharmaceutical supply chain in particular, is deeply complex. There are players in the industry that the average patient recognizes: doctors, pharmacists, and even their health insurance plan. In recent years, the public has become increasingly aware of the pharmacy benefit manager (PBM) as another key component of the delivery of healthcare. This rise in awareness has often been accompanied by confusion, skepticism, and outright criticism. Let’s take some time to unpack what the PBM industry is, what PBMs do, and what they don’t.
Simplifying Complexity
Pharmacy benefit managers emerged in the late 1960s as intermediaries in the healthcare system. Health insurance plans recognized the need for specialized management of prescription drug benefits, and the earliest PBMs did just that – providing claims processing and administrative support. Over the following decades, PBMs became the central entities connecting health plan members with the prescriptions they need to get and stay healthy.
AffirmedRx maintains a network of over 67,000 pharmacies where patients can use their benefit to fill prescriptions – eliminating the need for health plans to contract with individual pharmacies. To ensure seamless access to prescribed medicines, PBM networks often offer a mix of brick and mortar, mail order, and specialty pharmacies. When a member uses their benefit at the pharmacy counter, they pay a copay and coinsurance if applicable, and the PBM reimburses the pharmacy for the remainder – PBMs are then paid by health plans for the prescription. PBMs have been heavily criticized for charging health plans more than what they reimburse to pharmacies – this is called spread pricing. AffirmedRx does not engage in spread pricing – never has and never will.
Lowering Costs
One of the chief activities of a PBM, and one that has a direct impact on plan sponsor and patient pocketbooks, is negotiation with drug manufacturers to lower drug costs. PBMs often manage pharmacy benefits for multiple health plans, which can result in a single PBM managing benefits for millions of individual lives. The result is significant bargaining power that can enable a PBM to negotiate for price concessions from drug manufacturers in the form of direct discounts or rebates. The savings PBMs negotiate are then passed onto the plan sponsor (health plan) that can use the extra dollars to enhance the benefit design or lower premiums for members.
Critics of the industry have identified rebates as an unfair profit center for PBMs, as traditional PBMs may skim a percentage point or two from rebate dollars before passing along the savings to health plans – in other words, failing to pass through all rebate dollars to plan sponsors. Many PBMs claim to pass through all rebates, but they may retain a portion as something other than a “rebate”. AffirmedRx always passes through all manufacturer price concessions to health plans and provides full claim-level data transparency to plan sponsors so they can hold us accountable.
Formularies
In partnership with health plans, pharmacy benefit managers also design and manage formularies – lists of medications covered by the health plan. Formularies are often tiered with separate categories largely based on plan preference, each with its own out-of-pocket cost sharing structure. Plan sponsors may be more willing to have lower out-of-pocket costs for preferred tiers that include generics, while more expensive brand or specialty drugs may require patients to pay higher out-of-pocket costs in a higher tier. AffirmedRx prioritizes clinical appropriateness before cost when designing formularies. PBMs can negotiate price concessions for more favorable tier placement, but ultimately, the plan sponsor has the final say on formulary design.
