PBM vs. PBA: The pros and cons

As the healthcare industry reinvents itself, it continually develops a variety of patient-centric, value-based, delivery and payment models-some with staying power and others tested and forgotten.  

Related:Four ways clinical pharmacists can improve managed care

Pharmacy benefits managers (PBMs) have had success in reducing drug costs for their clients-health plans and self-insured employers-overseeing the entire drug benefit, negotiating manufacturer discounts and creating pharmacy networks.

PBMs, however, are not without detractors who claim PBMs lack transparency in announcing their spread between what clients pay and what managers negotiate with pharmacies, along with maximum allowable costs (MAC) lists that fluctuate at will.

PBM vs. PBA

Although the concept of a pharmacy benefits administrator (PBA) has been on the healthcare radar for years, it has not yet hit the big time. PBAs handle administrative services for the client, such as claims processing and data reporting, while other tasks, such as formulary management, rebating, contracting with network pharmacies, and MAC list management, may be managed by the client. Typically, PBA services are provided by leading PBMs.

“If you go back seven to eight years, plans could see an immediate return on investment from managing rebates internally and managing their own retail pharmacy networks and MAC list,” says Will McHugh, vice president, Solid Benefit Guidance, Montvale, New Jersey. 

Over the last few years, however, he says the major PBMs have dramatically improved pricing due to industry consolidation and formulary exclusions, and several PBMs (CVS Health and Envision) are owned by retail pharmacies.  

"The rise of specialty pharmacy has also given the PBMs another opportunity to generate significant revenue,” McHugh says. “If a plan works with a PBM for retail, mail and specialty distribution and accepts formulary exclusions and the positive impact those exclusions have on rebate yields that creates a very compelling financial situation for payers.”

 

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