Posting date: October 28, 2004

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Health Affairs, 10.1377/hlthaff.w4.504
Copyright © 2004 by Project HOPE

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The Role Of PBMs In Implementing The Medicare Prescription Drug Benefit

¹ Bob Atlas is a veteran consultant in health care strategy and management, based in Rockville, Maryland. He was previously president of the Lewin Group in Falls Church, Virginia.

^*Corresponding author.

Abstract

In creating the Medicare prescription drug benefit and stipulating that it be managed by private-sector prescription drug insurance plans, Congress opened a huge business opportunity for pharmacy benefit managers (PBMs). Although hardly noticed by the general public, PBMs already administer prescription drug benefits for nearly everyone with employer coverage and for many Medicaid recipients. The new law contains requirements for Medicare drug plan sponsors that could challenge some PBMs--most notably, the requirement to assume insurance risk. This paper explores challenges to PBMs’ business practices and provisions of the Medicare benefit that will require them to adapt their mode of operation.

Key Words: Consumer Issues, Elderly, Health Reform, Legal/Regulatory Issues, Medicare, Pharmaceuticals, Health Spending

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