As part of EZ Scripts Pharmacy being what a workers’ compensation pharmacy should be, we will continue on our series of Pharmacy Benefit Managers.
Workers’ compensation is difficult for all stakeholders, and our goal is simple, to demystify elements of a complex industry.
For our second piece, we will address the History of Pharmacy Benefit Managers, commonly known as PBMs.
The series of Pharmacy Benefit Managers will cover the following topics:
What is a PBM – https://www.ezrxmeds.com/part-1-blog-series/
The History of PBMs
The current state of PBMs, including transparency and litigation
The role of PBMs in workers’ compensation compared to private insurance
How PBMs are involved in patient care
How PBMs can impact medical providers
How PBMs impact independent pharmacies
The future of PBMs
The History of Pharmacy Benefit Managers
Pharmacy Benefit Managers, commonly known as PBMs, have played a growing role in the prescription drug system for decades. What began as a straightforward administrative function has transformed into a complex and influential part of how medications are priced, covered, and delivered to patients. Understanding how PBMs evolved helps explain many of the challenges patients may face when filling prescriptions today.
The origins of PBMs can be traced back to the late 1950s and 1960s, when insurance companies first introduced prescription drug coverage. At that time, PBMs were simple service providers. Their primary responsibilities included processing paper claims, confirming patient eligibility, and reimbursing local pharmacies. Their role was largely administrative, operating behind the scenes to support insurers and employers.
A major shift occurred in 1968 with the introduction of the plastic benefit card. This innovation allowed for more consistent data collection and improved the claims process. Through the 1970s, PBMs continued to rely on paper based systems, but the foundation was set for future advancements. By the 1980s, improved technology enabled real time electronic claims processing. During this period, PBMs expanded their services to include benefit design and the development of drug formularies. These formularies were originally designed to encourage the use of cost effective generic medications instead of higher priced drugs.
The 1990s and early 2000s marked a turning point for the industry. PBMs began consolidating and growing their influence by managing larger patient populations. With this increased scale, they gained stronger negotiating power with pharmaceutical manufacturers. They were able to secure discounts and rebates on medications, which were initially intended to reduce costs for employers and health plans. Over time, however, PBMs began retaining a portion of these savings, shifting their role from service providers to profit driven entities.
This era also saw significant mergers and acquisitions. Many PBMs merged with one another or were acquired by large healthcare organizations. A key moment came in 2007 when CVS acquired Caremark. This move signaled a broader trend toward vertical integration, where companies combined pharmacy services, insurance, and PBM functions under one umbrella.
By 2018, the industry had become even more concentrated through major mergers such as Cigna with Express Scripts and CVS with Aetna. Today, just a few large organizations control the majority of the PBM market. These companies now play a central role in determining which medications are covered, how much they cost, and what patients ultimately pay at the pharmacy counter.
For patients, this evolution has had real consequences. While PBMs were originally intended to help control costs and improve access, their growing influence has introduced new layers of complexity and, in some cases, higher out of pocket expenses. Formularies, prior authorizations, and pricing structures can all impact whether a medication is affordable or even accessible.
At EZ Rx Meds, we believe patients deserve clarity, fairness, and access when it comes to their prescriptions. By understanding the history and role of PBMs, patients can make more informed decisions and better navigate today’s prescription landscape.
How EZ Scripts Pharmacy Can Help
EZ Scripts Pharmacy entered this landscape to provide a necessary alternative. We have built our process to bypass the common delays that have become part of the PBM story.
Unlike standard retail pharmacies that must wait for an electronic approval before handing over a prescription, our team works differently. We focus on getting the medication to the patient first and handle the complex paper billing with the PBM afterward.
By focusing on the patient instead of the paperwork, we are helping to write a new chapter in the history of pharmacy care. Our goal is to return to the foundational purpose of healthcare, which is to support a fast and effective recovery for every individual we serve.
Getting started is as easy as a ten-minute phone call. Call 443.290.6337 or visit to https://www.ezrxmeds.com/sign-up-today-clients-patients-referrals/ to enroll today.