--- title: "Understanding Pharmacy Benefit Managers: What Employers Need to Know" description: Prescription drug prices have been rising steadily, and the impact is being felt by employees, employers, and healthcare advisors alike. Learn how to help. image: https://rmcgp.com/hubfs/RMC%20-%20Blog%20Header%20(14)-1.png --- [ ← Back to Blog ](https://rmcgp.com/blog) # Understanding Pharmacy Benefit Managers: What Employers Need to Know Written By RMC Group Published on: June 16, 2025 **Categories:** Health and Benefits ![Understanding Pharmacy Benefit Managers: What Employers Need to Know](https://rmcgp.com/hubfs/RMC%20-%20Blog%20Header%20(14)-1.png) # *PBMs Play a Key Role in Prescription Drug Pricing—But Transparency Matters More Than Ever* Prescription drug prices have been rising steadily in recent years, and the impact is being felt by employees, employers, and healthcare advisors alike. In our latest episode of *The Legacy Lab Podcast*—["Prescription Drug Costs Are Skyrocketing"](https://rmcgp.com/rmc-podcasts/ep.5-prescription-drug-costs-are-skyrocketing)—we explore the reasons behind this trend, including the role of Pharmacy Benefit Managers (PBMs).   ## **What Are PBMs—and Why Do They Matter?** Pharmacy Benefit Managers are third-party administrators that serve as intermediaries between insurers, pharmacies, and drug manufacturers. Their primary functions include managing formularies (the list of covered drugs), processing prescription claims, and negotiating prices and rebates with manufacturers. Ideally, PBMs would help reduce costs for employers and health plans by securing discounts and streamlining the drug supply chain. In many cases, they do provide value, especially for smaller employers who may not have the leverage to negotiate directly with pharmaceutical companies.   ## **The Growing Call for Clarity** However, the system isn’t always transparent. As noted by the Commonwealth Fund, questions have been raised about how PBMs set prices, share rebates, and choose preferred pharmacies. Some PBMs are vertically integrated with insurers or pharmacy chains, which can create complexities around pricing and access. According to a Center for American Progress article, there’s increasing interest in reforms that would encourage more transparency in how rebates are handled, ensuring that savings are passed on to plan sponsors and members. The takeaway? The PBM system could benefit from greater clarity and alignment with employer goals.   ## **What Employers Should Consider** If you're sponsoring a health plan, it's important to understand not just what you're paying for prescription coverage, but how that cost is determined. As discussed in [PLANADVISER](https://www.planadviser.com/know-pharmacy-benefit-managers/?utm_source=newsletter&utm_medium=email&utm_campaign=PAdash), many advisors are now urging clients to review PBM contracts closely, ask about rebate pass-through policies, and explore more transparent models when available. Some employers are even exploring independent or “transparent” PBMs that offer simplified fee structures and clearer reporting.   ## **Knowledge Is Power** In [Episode 5 of *The Legacy Lab Podcast*](https://rmcgp.com/rmc-podcasts/ep.5-prescription-drug-costs-are-skyrocketing), we talk about the current state of prescription drug pricing and how employers can better understand their pharmacy benefit strategy. Whether you’re concerned about rising costs or simply want to ensure your plan is operating efficiently, now is the time to take a closer look. Want to find out if your pharmacy benefits are aligned with your business goals? 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