Differences Between Pharmacy Benefit Managers & On-Site Pharmacies

The pharmacy benefit manager (PBM) is perhaps the most important “middle man” in the prescription purchasing supply chain. They can directly influence the prescription drug costs that get passed on to the plan sponsor. While the PBM isn’t the only link in the supply chain that can affect costs, it’s important to note that not all PBMs share the same mindset of transparency. That’s why self-funded, insured employers could do well to look into an alternative option—the on-site pharmacy—if they feel they’re spending far too much on prescription coverage.

The PBM-centric, traditional model is quite different from the on-site pharmacy model, thanks to the shortening of the supply chain that comes from operating an on-site pharmacy. Here’s a brief overview of how they differ:

What is a PBM’s Role?

The PBM’s job is to act as the intermediary between drug manufacturers and insurance providers. While they don’t distribute the prescription drugs themselves, they negotiate rebates with manufacturers on behalf of insurers and perform other important duties including claims processing, pharmacy network creation, and more.

The problem is that PBMs have not always been transparent. This isn’t to say that no PBM is ever to be trusted, but they have been put under the microscope in recent years as unethical business practices have come to light and prompted legislation to be passed in order to improve transparency and reduce the likelihood of a conflict of interest driving drug prices upward. With the development of the on-site pharmacy model, there is now a way for employers to secure lower prescription coverage costs without fully phasing out the PBM.

How Does the On-Site Pharmacy Model Work?

When an employer creates an on-site pharmacy, they’re able to cut out the PBMs, mail order pharmacies, and retail pharmacies in the supply chain and receive inventory directly from the wholesaler at a significantly reduced cost. There is still a manager in place to handle necessary administrative duties, but plan sponsors will have pricing transparency by default as the PBM is no longer negotiating the rebates for the insurers.

Can PBMs & On-Site Pharmacy Programs Coexist?

The goal of the on-site pharmacy isn’t to completely phase out the PBM. It’s more of a method to keep everyone honest while saving money and bettering employee wellness initiatives. As noted earlier, however, not all PBMs are open to a transparent approach and they, along with independent retail pharmacists, may not be fond of the move to an on-site pharmacy despite the fact that both entities are still involved. The PBM still has a role as an integral partner in the new pharmacy, and the retail pharmacies will remain in the supporting network.

Further Information

On-Site Rx, Inc. gives large employers throughout the Eastern and Central time zones the tools they need to create on-site pharmacies that thrive. We’ll help you better understand how to work with the PBM to implement this unique model and manage a full-service pharmacy dedicated to serving your employees and their dependents. Contact us today to get started.