Pharmacy Benefit Managers (PBMs) Explained - Learn How the Money Flows

Pharmacy Benefit Managers (PBMs) process prescription claims for health plans.
PBMs are one of the seven parts of the prescription medication ecosystem. All the members include:
1. Plan Sponsor
2. Health Plan
3. PBM
4. Pharmaceutical Manufacturer
5. Drug Wholesaler
6. Pharmacy
7. Patient
The money flows from Plan Sponsor to Health Plan to PBM to Pharmacy to Drug Wholesaler to Pharmaceutical Manufacturer.
The prescription medications flow from the Pharmaceutical Manufacturer to the Drug Wholesaler to the Pharmacy to the Patient.
Sources:
ascopubs.org/doi/full/10.1200...
www.optum.com/business/insigh...
dfwbgh.org/wp-content/uploads...
www.healthcarevaluehub.org/ad...
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[@elliottaugust9048]

Just remember the Golden Rule....."He who has the money, makes the rule" As a healthcare technology professional I really enjoy all of these videos

[@ahealthcarez]

Thank you for your feedback.

[@wendyhutchins4274]

This was very helpful in explaining the relationship between the PBM and other players involved I'm studying for my CEBS, on GBA1 and completing the section review for Prescription Drugs. Your videos have been extremely helpful. Thank you for sharing.

[@ahealthcarez]

Thank you for watching!!

[@Robert.Blodgett]

These are great videos. Thanks for doing a great job at summarizing all this healthcare information in to one KZbin channel.

[@ahealthcarez]

Thank you for watching.

[@tvibrock]

Nice job Eric! I always like your follow the money explanations. Transparency…

[@ahealthcarez]

Thanks so much for watching, Tim!

[@sobhannejad801]

Such a great video - incredible free content - excellent explanation - thank you so so much for sharing!!!

[@ahealthcarez]

Thank you for watching and for your comment.

[@zachwilliams6049]

Great breakdown. I enjoy your videos. This is the simple version, as we know there are many more players often vertically integrated. Love to see another more in depth video. Showing PBM/Healthcare plan/specialty pharmacies are the same companies. Then we have switches owned by PBM/Healthcare company. We have ePA platforms owned by wholesaler, eRx owned by PBMs, etc, etc. Essentially, the US has literally allowed a handful of very large publicly traded companies (which stockholders aren't mentioned in this video - and these companies ultimately report to them, not necessarily the patient's or the plan per se). Anyway, these handful of companies access/own all healthcare data/knowledge about patients and cash flow, while everyone else is in the dark. Knowledge is power and in this case $, and a LOT of $$! The US is one of the most unhealthy industrialized countries in the world, yet we spend more on healthcare than any other country on the planet. Why? You may ask, is because the US has allowed these companies to skirt Anti Trust with essentially no real over site (especially PBMs) for far too long. Plus, like mentioned in this video, there's no transparency. I'm a Doctor of Pharmacy with an MBA and certified Billing and Coder on medical side and I've been in healthcare business operations in large hospital organization for over 13 years and I've only seen this progressively worsen year after year...that's my soap box. However, I would like to see a really in depth video of the more "hidden" players (which are really the same players subsidiaries).

[@alexroberts1829]

Hey Zach, I'm working on a project related to PBMs and healthcare. Would love to chat with you if you have time

[@johnnyrags]

Thanks for explaining this complicated and opaque system within healthcare. It may be even more impactful to show folks what this means by way of an example using a specialty medication.

[@ahealthcarez]

Thank you for your suggestion.

[@vaporwaveplus6289]

Great breakdown of this very complex process!

[@ahealthcarez]

Thank you!!

[@yessumify]

Im glad I'm seeing this video. Im a floater pharmacist for a retail pharmacy. Im pretty naive, but learning, thanks to videos like yours

[@ahealthcarez]

Thank you for watching.

[@sugumrayan1746]

Simply amazing!! - short and sweet; no BS..

[@ahealthcarez]

Thank you for your feedback.

[@chadfollmer5857]

Very well done! As crazy as it is to say this, I have been in the industry 30 years and this is as efficient and accurate of a summary of payment and service flows that I have seen.

[@ahealthcarez]

Thank you for watching and for your support.

[@jdean813]

Such a great explanation of the Rx "game", Dr. Bricker. Another video I will be sharing with my Implementation Team as a great source of knowledge and explanation. Thank you!

[@ahealthcarez]

Super. Thank you, Janet!!

[@JustanotherYouTuber66]

Thanks for overview. Very insightful.

[@ahealthcarez]

Thank you for watching!!

[@renabell1108]

This stuff is slept on i am glad!!!

[@ahealthcarez]

Thank you for watching.

[@lreshay1]

Amazing explanations and an informative presentation, Dr. Bricker. Super helpful to learn both flow charts!

[@ahealthcarez]

Thank you for watching and for your feedback.

[@jeremyhuynh7106]

Love this content! Would love the break down of Mark Cuban's cost plus drugs flow of money

[@ahealthcarez]

Thank you for watching and for your suggestion.

[@kvenks]

Patients directly buy from Mark Cuban and get paid by the patients directly. No PBM. Also, they buy from manufacturers directly.

[@tomm7505]

My head is spinning. I never knew that the Rx drug business was such a maze of confusion. Thanks for the explanation.

[@ahealthcarez]

Thank you for your comment.

[@johnanderson8046]

What the system needs is greater transparency - something most of the members of your "ecosystem" very much oppose. They don't want the public to see where the money goes.

[@ahealthcarez]

Agreed. Thank you for watching.

[@AdvancedNursesEdConsultant]

Love your channel

[@ahealthcarez]

Thank you for watching and for your feedback.

[@Guaporean]

Spot on! Thank you

[@ahealthcarez]

Thank you for watching.

[@user-pe6tg2uv5i]

Need a sturdy napkin! Excellent!

[@ahealthcarez]

🤣🤣 Thank you for watching!!

[@zachwilliams6049]

The 73% total pharmacy expenditure being specialty was a question many others, including myself wanted to verify via source. This is the only part of the video I questioned. After doing a quick search I believe what was meant to be said was that "from 2011-2016, specialty meds accounted for 73 percent of all medicine spending growth" per article in Advanced Medical Reviews. "Specialty drugs are expected to represent almost 50% of total prescription drug spending in 2020" per same article. I would estimate today, 2023, that specialty prescription expenditure is closer to 60-65% total Rx $ expenditure utilizing same criteria for defining specialty as article. If above is incorrect article and data discussed in video around 6:40 can be verified, I'd really appreciate the link, as I discuss specialty Rxs/pharmacy daily and would love to have this data. Thanks, ZW

[@payamtehrani]

Thank you for this thorough explanation. Where does the Switch (i.e. eRX) fit in this flow?

[@ahealthcarez]

I have a video on that: kzbin.info/www/bejne/sIHVnYuErK96p6Mfeature=shared

[@payamtehrani]

Thank you. I was able to find it after writing this comment. I've been in this industry for a few years and still get confused. Thank you for all the educational videos.

[@ferndog1461]

Folks, appreciate this content creator's," unauthorized tour," behind the curtain of what is the pharmaceutical industry silk road. Take notes! Something tells me a Harvard trained lawyer, from pharmaceutical's law building, will have these videos taken down, soon. A TimHortons / Dunkin' / $tarBucks toast to this brave journalist.

[@ahealthcarez]

Thank you for watching and for your comment.

[@user-qb6uh4mm1u]

Thanks for the video! Can you explain what you mean when you say there's a conflict of interest with the PBM?

[@ahealthcarez]

PBM says it lowers drug spend for employer-sponsored health plan, but it works off a commission payment arrangement with pharmaceutical companies such that the more and more expensive drugs that are filled, the more the PBM makes.

[@merhawiyigzaw5869]

Can you provide a resource on the specialty pharmacy costs being 73% of total costs? You referenced that number around the 6:45 mark

[@zachwilliams6049]

Hey, the 73% of Pharmacy $ expenditures via specialty pharmacies, do you have source for that? I'm not saying it's untrue in anyway. I'd just like the hyperlink because specialty pharmacy is a real thorn in the side and I'd like to be able to use this value in discussion. Thanks, ZW

[@patrickokafor-yt9oy]

This is so simple with your explanation. I’ve been looking for a material to give this explanation but many seems difficult for me. Is there a written material of yours I can reference for my research work? Thanks!

[@patrickokafor-yt9oy]

Oh I just saw the sources you referenced! Thanks again!

[@ahealthcarez]

Thank you for watching and for your feedback.

[@nicolasvelez1099]

I am writing my thesis on how the US can reduce drug costs. Why don’t the pharmaceutical companies create their own health plans? Or why can’t there be a cap on rebates? Also, what would YOU suggest, would work in reducing drug prices ? Or health spending when it comes to drug prices?

[@ahealthcarez]

Pharma may be contractually bound with PBM not to compete. International travel/importation. The State of Utah paid for employees who needed Humira to go on vacation to Mexico and buy their Humira there.

[@nicolasvelez1099]

@@ahealthcarez so you’re saying pay for an employees’ travel and/or import drugs ? It would help to reduce the spending? Also, very informative videos, I am doing an healthcare MBA and they are highly informative and well-explained.

[@hotpack00]

you need to give examples of actual companies for each to make this more understandable.

[@ahealthcarez]

Thank you for your feedback.

[@yeshwayeshu7841]

Hi sir.. can you please share a video in general ehat us carrier, account and group

[@ramyadeepapalle1183]

I am a employee for company "x" that provides me with insurance as part of benefits - will that become my plan sponsor?

[@ahealthcarez]

Yes. That is correct.

[@ramyadeepapalle1183]

Healthplan is Trinet? (my insurance is through Trinet)

[@ahealthcarez]

Trinket is a PEO… they contract with a health insurance company.

[@richardc8129]

So, how does the employer get oustide the PBM???? What are the options to it???

[@ahealthcarez]

Switch to a transparent PBM that only charges per script… no other source of income.

[@richardc8129]

@@ahealthcarez Do you have a list? I'm not even sure of a search string that would get the correct results. BTW, this issue has risen to the top 3 of my social projects. Will be presenting to our state legislators (we are the bluest of blue states). Maybe I missed it, but it would also be helpful is you had a mailing list to accumulate data.

[@sanadbenali6993]

Hello Dr bricker Why is the plan and sponsor two different players What's the difference between sponsor and plan provider

[@ahealthcarez]

Great question. Plan sponsor is typically the Employer. The Plan exists for the benefit of the plan members. The plan is a separate legal entity. The Plan Sponsor has a fiduciary responsibility to the plan.

[@sanadbenali6993]

@@ahealthcarez so a pmb basically negotiates on behalf of sponsors and plans and indirectly patients and they negotiate with the medication industry to get better prices Is this correct?

[@user-fh1ij7xt5p]

@@sanadbenali6993 Spot on!

[@sanadbenali6993]

@@ahealthcarez dr bricker in your expert opinion The money that goes to pbms so they negotiate prices of Meds How much do good pbms save their clients compared to how much they are paid Really am asking how valuable are pbms to the system

[@sanadbenali6993]

Another interesting thing is in USA pbm can represent different entities like the government or private sponsors which are pretty big clients The dynamic here is interesting the manufacturer has two major teams to compete with, government and private sector Meanwhile in national systems a manufacturer has one competitor the government Am not sure who has it better because In USA a manufacturer has options sometimes they can lower for the private sector and sometimes for the government The government and private sectors compete for better prices which is kind of in favor of the manufacturer then again it kind of evens out because the manufacturer has competitors too The NHS type systems are not competing with any big private sector over prices so manufacturers here have the lower hand Am I right?

[@jeanohara6179]

Define plan sponsor please! I don’t get who that is, maybe the employees company?

[@ahealthcarez]

Good question. The employer (e.g. company, school system, etc.) is the plan sponsor. Thank you for watching.

[@lorettab6092]

Not all specialty medications are expensive. my sons transplant meds would only be $50 at my local pharmacy. PBMs force to their own specialty pharmacy so they can jack hp their price. Trucks reach 120-170 degrees as they ship most in bags. A recent study by students at southwest Oklahoma State university showed 80% of packages don't meet FDA safe guidelines but the FDA doesn't regulate. This should be FRAUD as trucks reach 120-170 degrees.

[@ahealthcarez]

Wow. Good to know. Thank you for sharing.

[@BernicePezuzu]

Why isn’t this taught in pharmacy schoolsss 🤔🤔🤔🤔

[@ahealthcarez]

Inquiring minds want to know. Thank you for watching.

[@angeliaandmarvinconnell3123]

Simple question....do the pbms make money by denying medication

[@ahealthcarez]

Good question. Depends. If the parent insurance company carries the healthcare risk for the population (e.g. Medicare Advantage)… then Yes. If the parent insurance company Does NOT, carry healthcare risk for the population (e.g. Traditional Medicare, self-funded employer plans, Then NO.

[@bmuhamad]

Seems to be a win-win for PBMs if patient gets meds, than not. Finances...

[@PerfectHandProductions]

I still don't get it. The PBM seems like a pointless middleman. Why doesn't the "health plan" (insurance company?) just pay the pharmacy directly?

[@ahealthcarez]

Several decades ago PBMs were started by pharmaceutical companies themselves to process claims from pharmacies. They then spun them out as independent companies or sold them to insurance companies. Originally the insurance carriers didn’t want to deal with pharmacy claims because they are high volume and low dollar… too much of a headache decades ago before the internet.

[@PerfectHandProductions]

@@ahealthcarez Thank you for the prompt reply!

[@holmbjerg]

They very much ARE pointless middle men, that does not exist in any other healthcare system.

[@rxfray8235]

Where does the government com in with PBM’s - thanks to Bush Jr.?

[@catprincx]

So it’s a racket…

[@ahealthcarez]

Y

[@catprincx]

@@ahealthcarez I am an employee for a state’s medicaid that is going through a procurement of a PBM vendor. I would hate to see one company have a hold over a whole state’s health care system. Then it is not necessarily a social service is it if all the vendors are subsidiaries of one company?

[@sepiks4250]

You explained it better than most papers, documentaries and lectures I’ve watched. My only question is who is the “Plan Sponsor”? Is this the employer?

[@ahealthcarez]

Yes. It is the employer.

[@JohnMichaelReed]

Everyone who makes money off this system or supports this system belongs in jail.

[@ahealthcarez]

That day may come… for some. Thank you for watching.

[@jonnash5196]

Isn't this just a bit crazy ??

[@ahealthcarez]

Yes. Thank you for watching.

[@neilgoodman2885]

>>I smell legalized FRAUD! NOONE CAN BE BOTH A SELLER AND A BUYER WITHOUT FRAUD! >>Unless, unless (here's that word again) the law says so. >>Maybe the legislators should empty their pockets at the end of each day; (just like 1984's Big Brother demands). >>Happy New Year -- with all due respect, of course, NHG

[@ahealthcarez]

Thank you for sharing your thoughts.

[@rickh1755]

At least one reason that PBMs exist in their current state is to combat the inelastic demand curve we see with drug manufacturers.

[@ahealthcarez]

Thank you for watching and sharing your point of view.

[@DinoRamzi]

Theoretically. But they have not lived up to their purpose.

[@km9381]

You took the long way around of saying it's a scam

[@ahealthcarez]

Well... Yes. Thank you for watching and for your comment.

[@wickjames5326]

So basically y’all are just drug dealers lol

[@ahealthcarez]

Thank you for watching and for your comment.

[@wickjames5326]

@@ahealthcarez do you ever take into consideration the lives that you ruin?

[@user-pb4vq6pg8j]

Pbm stands for what?

[@ahealthcarez]

Pharmacy Benefits Manager.