Nicole Kruczek, BS Pharm

Pharmacy benefit managers (PBMs) are a large part of our health care benefits, but do they bring value? A PBM is responsible for administering and processing pharmacy claims; providing a network of pharmacies for dispensing; providing mail order services (90-day supply); negotiating with manufacturers for rebates; optimizing plan performance for clients; and ensuring safe, low cost, and clinically appropriate medication utilization. 

For starters, President Donald Trump pointed to PBMs for driving up drug prices and increasing overall US health care spending. At the center of his argument are PBM rebates from drug manufacturers. So, what are they?

A drug rebate is a price concession paid from a drug manufacturer to a PBM and are typically applied to high-dollar brand name prescription drugs that have many competitors. The rebate is an incentive for the PBM to add the manufacturer’s brand product to its formularies. The PBM then shares the rebate with the health insurer.

Let’s take a moment to discuss rebates in general. By definition, a rebate is a type of marketing promotion that is used to encourage a consumer to purchase a product. It is an amount paid, by return, refund, or reduction in what has already been paid by a consumer.

Have you ever used a mail-in-rebate after purchasing a set of tires for your car or maybe you purchased a 1-year supply of contact lenses? These items commonly offer mail-in rebates. How about coupons? Do you use coupons when you shop at the grocery store? Save $1 on laundry detergent? If you have, then you too, have taken advantage of a rebate. Why wouldn’t you?

So, everyone wants a piece of the drug rebate. PBMs want it to offset their costs, the health insurer wants to use a portion to lower premiums and out-of-pocket costs to their members, and the consumer thinks it should be completely passed on to them.

Meanwhile, the administration is proposing that drug rebates should be removed completely, reducing the need for high drug prices to begin with. It is unclear whether or not a rebate-free system would actually work. There is no doubt the entire strategy is flawed, however, is it completely the fault of the PBM?

Will we ever see a good solution? It’s likely we will as the 3 largest PBMs have either acquired or been acquired by a health insurer. CVS purchased Aetna, Cigna purchased Express Scripts, and United Healthcare purchased Optum.

This turn in the market and change in the business model may foster innovative strategies to help solve the problem of rising drug prices. These newly combined companies will have to put the consumer first to truly make an impact on reducing drug costs. By partnering with providers and basing formularies on the most beneficial, cost-effective choice for the consumer, PBMs can and will make a difference. 

Nicole Kruczek earned her B.S. in Pharmacy degree from Temple University and is currently enrolled in the Masters of Pharmacy Business Administration (MPBA) program at the University of Pittsburgh, a 12-month, executive-style graduate education program designed for working professionals striving to be tomorrow’s leaders in the business of medicines. She has spent the last two decades in management roles in various pharmacy operations in long-term care, specialty, and PBM.

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Pharmacy benefit managers are a large part of our health care benefits, but do they bring value?

Are PBMs the Big Bad Wolf?

The Masters in Pharmacy Business Administration (MPBA) program is an exclusive collaboration between the University of Pittsburgh School of Pharmacy and the Joseph M. Katz Graduate School of Business. It is designed for emerging pharmacy professionals interested in obtaining an in-depth understanding of the business of pharmaceuticals and who are seeking executive positions.

The MPBA synergistically fuses the expertise of the schools of pharmacy and business, which is efficiently formatted for working professionals and offers specialized focus tracks in specialty pharmacy, community pharmacy, and managed care pharmacy.

The program lasts for a duration of 12 months, with classes held every other weekend on Friday and Saturday. It includes 3 immersion weeks in which the candidates are present on campus Monday-Friday. The program consists of 36 credits that build critical skills and expertise for pharmacy professionals seeking to substantially increase their business acumen and marketability.

The MPBA is designed to accommodate a demanding schedule. In an executive program, it’s easy for life to feel overwhelming and hectic. The MPBA staff and teachers take this into full consideration and have designed a program that enhances the executive master’s experience by expediting registration, course material, schedules, and e-learning tools necessary for success in the program.

Classes run the length of a full business day to accommodate a standardized master’s program curriculum. In addition, in order to promote the highest level of information retention due to what sometimes may feel like a plethora of information on a typical day of class, all lectures are video recorded for convenient access on demand anytime, anywhere. The staff, who are also very vigilant in terms of making time for private and group recitations, provide encouragement and serve as a reliable guide for each student’s individual journey throughout the MPBA experience.   

Graduates of The MPBA Program are Able to:

Identify and propose innovative and dynamic solutions to common business problems in the broader context of an evolving health care industry.

Discuss payer contracting and network strategies as they apply nationally and regionally to the business.

Use contemporary methods to assess inputs for valuation models, the impact of risk on valuation, and how these models help in decisions related to capital budgeting, asset acquisitions, and the capital structure of corporations.

Develop and utilize a managerial budget to maximize organizational efficiency, including expense reduction strategies, to support rational managerial decision-making.

Discuss the influence of changing technologies, public policy directives, and competitive requirements as they affect decisions related to staffing, compensation, employee relations, and human resource development.

Identify and discuss operational and tactical aspects of multi-facility network management as well as its strategic implications, including the intricacies of the underlying tools, methodologies, and decision-support systems.

To gain admission into the MPBA program, 2 years of professional experience is recommended. Candidates with a PharmD or a Bachelor of Science (BS) in pharmacy will receive preferential admission.

A PharmD, BS in pharmacy, or an undergraduate degree from an accredited US institution or its equivalent is required. Candidates whose GPA was below 3.0 may be required to take the GMAT exam.

Your employer must indicate its willingness to provide you with sufficient time to complete your MPBA class schedule. In addition to time off, many candidates receive financial support from their employers; however, this is not required.

The final stage of the selection process is the interview. Interviews provide the school an opportunity to assess your motivation for enrolling in the MPBA program, the quality of your academic and professional experience, and your plans for personal and career growth.

The investment for the University of Pittsburgh MPBA program is $58,050, paid in equal parts of $19,350 per term. Students traveling from out of town are responsible for all travel expenses.

All books, cases, and simulations and Microsoft Windows and program bundle software packages are included in the price of admission. Meals are provided during class sessions, breakfast, and lunch. Access to all University of Pittsburgh student resources such as libraries, fitness facilities, and public transportation are covered while on campus.

The MPBA faculty created a pharmacy management-focused curriculum that encompasses the business concepts and analytical tools used by successful health care executives.

The 36 credit curriculum is comprised of 18 credits of graduate business courses, 12 credits of pharmacy business administration courses, and 6 credits that allow students to further develop their business acumen in a focused industry track.

One of the most attractive elements about the program beside the invaluable knowledge and skillsets learned is the opportunity to collaborate with health care business professionals from all different backgrounds and specialties. Classmates, as well as guest speakers, are able to offer their unique insight into the exciting and forever growing business that is pharmacy. The dual benefit of having classmates to bounce ideas off of and the access to proven leaders and potential mentors in the business of pharmacy empowers all students in the program to realize and manifest their individual success throughout their current and future careers in pharmacy.

A word of caution however, this program is definitely time consuming. Time and stress management skills are crucial if one is to succeed during their MPBA experience. Because the program and class schedules can seem rather condensed, making sure you exercise self-discipline and dedication to your studies is a must. But if you exercise confidence and resilience, there is no reason to believe that you will not succeed in your endeavors.

All MBA programs are designed to further develop the business aptitude of students in their quest to become successful titans in their career endeavors—and the MPBA program is no exception. This unique program is full of learning and opportunities to nurture, mature, enhance, and expand students’ understanding and passion for pharmacy.

So many students who have already graduated from this program credit their individual success and places in business to what the learned and extracted from their MPBA experience. This program not only produces competent and qualified professionals, but it also undoubtably produces influential and successful leaders.

, earned her BS in Pharmacy degree from Temple University and is currently enrolled in the Masters of Pharmacy Business Administration (MPBA) program at the University of Pittsburgh, a 12-month, executive-style graduate education program designed for working professionals striving to be tomorrow’s leaders in the business of medicines. She has spent the last two decades in management roles in various pharmacy operations in long-term care, specialty, and PBM.

 earned his Masters of Science in Healthcare Administration from Saint Joseph's University and is currently enrolled in the Masters of Pharmacy Business Administration program at the University of Pittsburgh. The program is a 12 month executive-style, graduate education program where health care professionals obtain an in-depth understanding of the business of medicines. Currently, Ryan works for the University of Pittsburgh, School of Pharmacy, Program Evaluation and Research Unit as a research specialist. Ryan’s research is primarily focused on the opioid epidemic and provides technical assistance to stakeholders across the commonwealth in their mutual efforts to reduce opioid death rates in Pennsylvania.

The Masters in Pharmacy Business Administration program is designed for emerging pharmacy professionals seeking executive positions who are interested in obtaining an in-depth understanding of the business of pharmaceuticals.

Get Ahead in Mastering the Business of Pharmacy

Over the past 30 years, health plans have changed from primarily conventional health care coverage to alternatives such as health maintenance organizations (HMOs) and, most recently, high deductible health plans (HDHPs). Choosing the right plan for you and your family can be very confusing. I’d like to walk through the similarities and differences in these plans and examine the prevalence of each as seen over the past 3 decades.

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Also known as a traditional insurance plan, conventional insurance coverage operates on a fee-for-service (FFS) structure. It provides basic coverage for doctor visits, hospitalization, surgery, and other medical expenses in an 80/20 split. The insurance covers 80% of the bill while the patient is responsible for the remainder.

Deductibles, the amount you are responsible to pay before insurance begins to pay, are usually in the range of $250 for an individual but can be as high as $10,000. The higher the deductible, the lower the premium.

Most plans include an annual maximum out-of-pocket amount; however, they also have a lifetime cap. In other words, once your bills reach a certain amount—usually $1 million or higher&mdash;the insurance company just won’t pay anymore.

These plans are said to focus on treating health issues rather than preventing them, therefore, they often do not cover “well” visits or annual physicals.

HMOs became more popular following the HMO Act of 1973, which was signed into law by President Richard Nixon to provide federal funding for qualified HMOs. It provided financial risk-sharing for health care providers, introduced programs to integrate administrative claims, provided incentives for wellness programs or preventative care, and definitively defined coverage benefits and rules for member access.

HMOs provide health insurance coverage for a monthly or annual fee. An HMO limits member coverage to medical care provided through a network of physicians and other health care providers who are under contract to the HMO. These contracts allow for premiums to be lower than for conventional health insurance because providers have the advantage of having patients directed to them.

In addition to low premiums, there are typically low or zero deductibles with an HMO. Instead, the organization charges a co-pay for each office visit, test, or prescription. Co-pays in HMOs are typically low, for example $5 to $20, per service.

Out-of-pocket expenses are usually minimal, which makes HMO plans affordable for families and employers. HMOs require a primary care physician (PCP) to manage care, who are considered “gatekeepers” and must provide a referral before you can see a specialist.

PPOs provide a lower rate and feature a network of doctors and hospitals that are recommended. However, PPOs do not limit you from seeing physicians outside of the PPO network. Most PPO plans cover at least some of the bill for an out-of-network provider, but you will likely pay more for the care at out-of-network providers than at in-network providers.

PPO plans do not require patients to get a referral from a PCP to see a specialist. They allow you to skip your PCP and go straight to a specialist, such as a cardiologist or endocrinologist. If a patient needs to see a specialist, they can make an appointment with them directly without a referral.

They typically have more expensive monthly rates than other types of health plans due to the freedom to see both in- and out-of-network doctors.

A POS plan requires individuals to choose an in-network PCP and get referrals from that physician if they want to see a specialist. They also provide coverage for out-of-network services; however, you will have to pay more than if you used in-network services.

POS plans require the policyholder to make co-payments, but in-network co-payments are often just $10 to $25 per appointment. They also do not have deductibles for in-network services. 

POS plans often cost less than other policies but savings may be limited to visits with in-network providers.

POS plans offer nationwide coverage, which benefits patients who travel frequently. A disadvantage is that out-of-network deductibles tend to be high for POS plans. When a deductible is high, it means patients who use out-of-network services will pay the full cost of care out of pocket until they reach the plan’s deductible.

An HDHP is a health insurance plan with a high minimum 

 for medical expenses. Once an individual has paid that portion of a claim, the insurance company will cover the other portion as specified in the contract. An HDHP usually has a higher annual deductible than a typical health plan, and its minimum deductible varies by year. 

The higher deductible also lowers insurance premiums, making health coverage more affordable.

HDHPs have an annual catastrophic limit on out-of-pocket expenses for covered services from in-network providers. Once you have reached this limit, your plan will pay 100% of your expenses for in-network care.

With an HDHP, you can qualify for a tax-advantaged health savings account (HSA). You contribute funds to an HSA to be used for medical costs that HDHPs don’t cover. These funds are not subject to federal income taxes at the time of the deposit.

Most employers or plan sponsors will offer colleagues a choice between 2 or more of these types of plans. In 1988, 73% of covered workers chose a conventional health plan with the remaining enrolled in an HMO or PPO. Around 1999, the number of covered workers with conventional health coverage would drop dramatically to only 10%, the remaining workers would choose an HMO, PPO, or a POS. By 2009, the conventional fee-for-service health plan would become nearly extinct.

The PPO would make up the majority choice of covered workers since 1999, however, it is declining year over year. Around 2006, the HDHP would be developed and grew in use year over year, some of which is related to plan sponsors offering the HDHP as the only choice (

Nicole Kruczek earned her BS in Pharmacy degree from Temple University and is currently enrolled in the Masters of Pharmacy Business Administration (MPBA) program at the University of Pittsburgh, a 12-month, executive-style graduate education program designed for working professionals striving to be tomorrow’s leaders in the business of medicines. She has spent the last two decades in management roles in various pharmacy operations in long-term care, specialty, and PBM.

Over the past 30 years, health plans have changed from primarily conventional health care coverage to alternatives such as health maintenance organizations and, most recently, high deductible health plans.

Tracking the Shift in Health Insurance from Conventional Coverage to High Deductible Plans

Prescriptions have been provided to patients by mail in the United States for more than a century. Once available in only remote or rural areas, mailing a prescription to a patient’s home has since become more widely accepted.

In 1946, the United States saw the first pharmacy dedicated to mailing prescription drugs to a patient’s home. The Veterans Administration (VA) was the first to offer services to eligible veterans. Today, the VA still accounts for nearly one-third of the mail-order prescriptions that are dispensed in the United States.

The American Association of Retired Persons and the National Retired Teachers Association formed a mail pharmacy that was not-for-profit and served only their membership. By 1963, for-profit entities began to market mail-order pharmacy services to corporate, government, and union employers. There was some opposition to this type of pharmacy throughout the 1960s.

The 1980s saw the most rapid growth of the mail-order pharmacy industry with revenues soaring from $100 million to $1.5 billion. The trend would continue to grow throughout the 1990s mirroring the growth of the internet. Mail-order pharmacy became more cost effective and convenient.

As more employers began to offer the mail-order pharmacy option, and in some cases mandated usage, we continued to see this trend increase. Although there was an increase in the number of patients using mail-order pharmacy services, there has been a slow-down in actual use over the past decade. A comparison of mail-order pharmacy use showed mail order accounted for 18.6% of prescriptions dispensed to in 2011 compared with 18.5% in 2012, 

according to research published by the Drug Channels Institute

Mail-order pharmacy has taken hold and grown over the last half century, currently mailing billions of prescriptions annually. Many employers offer a mail-order pharmacy option as part of their comprehensive prescription benefits. If a patient are unsure whether mail-order pharmacy is right for their needs, they should consider the following benefits to make an informed decision.

The first step is to understand prescription drug benefits. Contact the health plan to compare the price difference between filling prescriptions via mail order versus a local pharmacy. Oftentimes a mail-order pharmacy can fulfill a 90-day supply at cost savings versus a 30-day supply at a local pharmacy.

Ordering and refilling prescriptions is convenient. Mail-order pharmacies make it easy to manage medication ordering and refills using a computer or smart phone. There is even an option to synchronize multiple refills, a great convenience when managing chronic illnesses.

Receiving mail-order prescriptions will save time. Gone are the days of driving across town to wait in line for a prescription.

Quality is at the forefront, with a team of pharmacists and technicians ensuring the quality of the prescription. Every prescription is reviewed by a pharmacist prior to shipping, and they are only a phone call away if there are questions about your medication when it arrives. 

Although there are many great benefits of mail-order pharmacy, there are times when it may not be the right choice. 

Certain classes of medications, especially antibiotics, must be started immediately. It may be best to fill these medications at the local pharmacy. 

If a patient is adjusting to a new regimen or needs additional medical supplies in conjunction with their medication, it might be best to stop at the local pharmacy.

For face-to-face interaction, questions about a prescription or counseling about adverse events, nothing beats the local pharmacist. An educated health care professional, pharmacists are one of the most accessible health care providers who can offer consultations with no appointment needed. 

Having worked in a mail-order dispensing pharmacy for more than 10 years, I can tell you first-hand, mail-order pharmacies provide accurate and efficient pharmacy services. Quality is our most important priority second only to customer service. Each prescription is reviewed by no less than 2 pharmacists to ensure accuracy of both the data entry and the verification of the product. A pharmacist is only a phone call away and available for any and all questions or concerns. If it is offered as a pharmacy benefit and a good fit for you, using a mail-order pharmacy can save you time and money without concession of quality or pharmacist availability.  

What is the Role of the Mail-Order Pharmacy?

A drug formulary is a list of medications that are covered by a prescription drug plan or a hospital. It is comprised of both brand name and generic drugs that have been determined by a committee to offer the greatest overall value.

The committee of medical professionals, known as the Pharmacy and Therapeutics (P&T) Committee, reviews medications for efficacy with consideration for cost or reimbursement and determines which drugs will be included or excluded in the formulary. They will also consider accessibility of the medications when making a determination to add a drug to the formulary.

Collaborate to promote safe, cost-effective drug therapy.

Develop policies for the selection process by evaluating drug therapy and utilization.

Educate practitioners regarding appropriate drug utilization.

Guide the health plan or institution on an ongoing basis regarding the drug formulary.

The P&T committee is comprised of health care providers such as physicians, mid-level prescribers, pharmacists, plan administrators, and quality assurance personnel. They each bring their professional judgement to support the decision-making process.

They typically will meet quarterly for an ongoing review to address new drugs and formulary change requests. Medications are always reviewed for clinical efficacy and safety first, followed by standards of medical care, other treatment options, accessibility to the consumer, and lastly for cost or reimbursement.

A drug formulary can vary between open or closed.

In an open formulary, the insurer covers all medications. There are no limitations, offering the consumer access to a generally very large list of medications. An open formulary can have some specific drug exclusions; however, all therapeutic classes are represented. There is also a process in place for the consumer to get an override to obtain a specific drug. This is an advantage to the consumer from the perspective of access to care but can be costly to both the health insurer and the consumer.

A closed formulary does not cover prescription drugs that are not on the formulary list. Exceptions are only made for medical necessity. This is a cost effective way for a health insurer to control spending on drug costs. It is more economical for the consumer as well, however, a consumer may feel as though they cannot get exactly what they need.   

Drug formularies can also be tiered, meaning the coverage depends on which tier a specific drug is categorized. The tiers may vary between 3 and 7 different levels. Most commonly are 3 tier plans:

In tier 1, the lowest level, the insurer will generally cover most or all of the drug price. In tier 3, the consumer will pick up the majority of the price. In addition to drug placement, some plans also layer in additional clinical and cost controls, known as utilization management. The most common types include:

restricts certain drugs that require physicians to obtain approval from a health insurer before they will cover the medication.

 bases coverage on the amount of doses or the strength of a particular dose that you can get of a drug in a period of time, determined by the insurer.

 a requirement on certain drugs that they must first try, or already have tried, an alternative medication for a particular diagnosis. Frequently, the alternative drugs are less expensive and have been determined to be safe and effective.  

A drug formulary can minimize overall medical costs, improve access to more affordable care, and provide an improved quality of life. For the consumer who is relatively healthy and is not taking many prescriptions, a drug formulary is beneficial to keep the out-of-pocket costs low.

An effective formulary strategy can also provide significant savings for the health insurer while focusing on quality and meeting the needs of the consumer.

There are some basic tips or tricks to getting the most out of your insurance plan and to maintain the continued care patients are accustomed to.

Review and be familiar with the drug formulary on your insurance plan. Being educated is a good first step to ensure you are getting the best value out of your prescription benefit. Be sure to check the drug formulary every year with open enrollment as changes are always being made to drug coverage. If choosing an insurance plan for the first time, look for one that covers the medications you are currently using.

When a medication is being prescribed by your doctor, be sure to ask whether there is a generic form available. They are usually much less expensive, fully covered by insurers, and equally efficacious. It is okay to discuss medication cost with your doctor. Simply because a drug is more expensive does not mean it is better.

Before leaving the pharmacy with your newly prescribed medication, be sure to confirm with pharmacy personnel that your insurance covered in whole or part of the cost. If it is an expensive brand name medication or simply not covered by your insurer, speak to your pharmacist, they have the knowledge to recommend an alternative, generic, or a process that to follow to apply for a formulary exception.

Whether your plan has an open or a closed drug formulary, it is important be familiar with your current drug formulary. Your portion of drug costs will depend upon your knowledge of your insurance coverage.

Nicole Kruczek earned her B.S. in Pharmacy degree from Temple University and is currently enrolled in the Masters of Pharmacy Business Administration (MPBA) program at the University of Pittsburgh, a 12-month, executive-style graduate education program designed for working professionals striving to be tomorrow’s leaders in the business of medicines. She has spent the last two decades in management roles in various pharmacy operations in long-term care, specialty, and pharmacy benefit management.

There are some basic tips or tricks to getting the most out of your insurance plan and to maintain the care patients are accustomed to.