What do PBMs do?

In this episode, Darshan Kulkarni talks with Thomas Siepka about the 340B program, rebates, and the crucial role of pharmacy benefit managers (PBMs) in today’s healthcare system. Siepka, a pharmacist and CEO of HCI Healthcare Consultants, shared his extensive experience working across health systems, community health centers, and tribal healthcare organizations.

They break down the complex healthcare landscape, explaining the distinction between health insurance companies and PBMs. PBMs specialize in managing the medication component of insurance programs, handling everything from claims processing and formulary management to manufacturer negotiations and rebate administration. Initially, PBMs were simply transactional processors of claims, but over time, they became key players in controlling medication costs, developing formularies, and creating step therapy protocols to ensure appropriate prescribing.

The discussion highlights how PBMs evolved in response to pharmaceutical influence on prescribers, which sometimes led to inappropriate drug use and rising healthcare costs. While PBMs help manage this, their practices—such as retaining rebates, fees, or reclassifying discounts—can sometimes increase costs for employers or patients. Siepka also underscores the influence of direct-to-consumer advertising, which further pressures providers and patients in drug selection.

Ultimately, PBMs serve as intermediaries trying to balance patient care, cost management, and insurer obligations, but their opaque financial practices make transparency critical.

For more information, reach out to us on www.kulkarnilawfirm.com