Pharmacy Benefit Managers and Medicaid

Pharmacy benefit managers (PBMs) have a central role in the drug distribution chain and serve as intermediaries in administering the prescription drug benefit on behalf of payers. In recent years, some policymakers and stakeholder groups have identified the role of PBMs in the Medicaid drug distribution chain as a potential driver of increased drug spending. This issue brief provides an overview of PBMs and their interaction with Medicaid. The brief begins with a summary of clinical and operational services PBMs provide to their clients, as well as PBMs’ sources of revenue. It then outlines stakeholder concerns associated with PBMs and summarizes recent federal and state policy efforts to manage and oversee PBM activities and address these issues.