As part of EZ Scripts Pharmacy being “What a Workers’ Compensation Pharmacy should be”, we will begin a series of breakdowns of topics related to workers’ compensation.
Workers’ compensation is difficult for all stakeholders, and our goal is simple, to demystify elements of a complex industry.
For our first series, we will address Pharmacy Benefit Managers, commonly known as PBMs.
This series will cover the following topics:
What is a PBM
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
What is a Pharmacy Benefit Manager
If you have health insurance or manage a workers’ compensation program, you interact with Pharmacy Benefit Managers every day, often without realizing it. PBMs operate behind the scenes of the pharmaceutical supply chain, connecting insurance carriers, drug manufacturers, and pharmacies.
They are largely invisible to patients, yet they influence nearly every prescription decision made.
Understanding what PBMs do and how they function is essential to understanding how prescription care is delivered and managed in workers’ compensation.
The Core Role of a PBM
PBMs are third party administrators hired by health plans, employers, and government entities to manage prescription drug benefits. They first emerged in the 1960s as administrative claims processors. Over time, their responsibilities have expanded significantly.
What began as paperwork support has evolved into decision making authority.
Today, PBMs typically handle several key functions. They negotiate discounts and rebates with drug manufacturers based on volume and formulary placement. They design formularies, which are the lists of medications that are approved for coverage and determine patient access and cost sharing. They establish pharmacy networks by contracting with retail pharmacies. They also process prescription claims electronically and determine reimbursement amounts.
Together, these functions allow PBMs to shape not only costs, but care pathways.
Market Consolidation and Industry Control
The PBM industry is highly concentrated. Three major companies control the vast majority (nearly 80%) of the prescription drug market. These organizations are no longer standalone PBMs. They are vertically integrated healthcare corporations.
These entities are no longer just PBMs; they are vertically integrated healthcare conglomerates. For example:
• CVS Health owns CVS Caremark (PBM), Aetna (Insurer), and CVS Pharmacy (Retail).
• Cigna owns Express Scripts (PBM).
• UnitedHealth Group owns OptumRx (PBM) and UnitedHealthcare (Insurer).
When one company controls the insurance card, the pharmacy counter, and the benefit rules, influence compounds quickly.
This consolidation gives PBMs enormous leverage across nearly every aspect of healthcare delivery, from coverage decisions to pharmacy access.
How PBMs Generate Revenue
PBMs earn revenue through multiple channels. One common method is spread pricing, where the PBM bills the insurer a higher amount than it reimburses the pharmacy and retains the difference. Another method involves manufacturer rebates, where PBMs negotiate payments from drug manufacturers for preferred placement on formularies. A portion of those rebates may be retained rather than fully passed through. PBMs also charge administrative and management fees to insurers and manufacturers.
The more complex the pricing model, the harder it is for employers and providers to follow the money.
This lack of clarity is at the center of many ongoing transparency concerns.
PBMs in Workers’ Compensation
PBMs play a distinct role in workers’ compensation compared to group health. In workers’ compensation, injured employees do not pay copays and medically necessary care is covered in full. PBMs in this space focus heavily on clinical oversight, injury related prescribing, and utilization controls.
In theory, this oversight protects injured workers. In practice, it can introduce friction.
They often emphasize opioid management, formulary compliance, and prior authorization requirements. While rebate leverage is generally lower due to smaller claim volume, PBMs attempt to control costs through fee schedules and generic substitution.
However, PBM involvement can also create delays. Prior authorization requirements and network restrictions may slow access to medications. In many workers’ compensation systems, injured workers are not required to use a PBM pharmacy network, which creates alternative pathways to faster care.
How EZ Scripts Pharmacy Is Different
EZ Scripts Pharmacy is a workers’ compensation pharmacy built to bypass the administrative hurdles that can negatively impact patient outcomes at traditional chain pharmacies. In most cases, we fill prescriptions immediately rather than waiting for insurance approval, helping minimize or eliminate PBM related delays.
Reliable access to prescribed medications plays an important role in supporting recovery and continuity of care in workers’ compensation.
Streamlining the pharmacy process can help reduce friction for injured workers, providers, and claims teams.
In short, we are the best choice among pharmacies for servicing workers’ compensation claims, and getting started is as easy as a ten-minute phone call.
Call 443.290.6337 to enroll today.