In relation to PBMs, what is the role of formularies?

The role of formularies in relation to Pharmacy Benefit Managers (PBMs) is primarily to provide a list of medications that are covered by insurance plans. This list typically categorizes drugs into tiers, influencing the copayment amounts that patients will owe based on which medication they select. Formularies exist to help manage costs and ensure that patients receive effective medications while also controlling the expenses incurred by insurers and, ultimately, by patients.

By having a formulary, PBMs can negotiate better prices with pharmaceutical manufacturers, ensuring that patients have access to a range of medications without the full burden of their costs. This arrangement benefits both the insurer and the patient, as it streamlines the approval process for covered medications and clarifies what is financially supported under a specific insurance plan.

In contrast to this, limiting the amount of medication a patient can receive or regulating pharmacy staffing does not encapsulate the function of formularies. Likewise, while formularies may influence medication pricing through negotiated discounts or tier pricing, they do not determine prices directly. Thus, identifying the coverage of medications through formularies is crucial in understanding the role of PBMs in the healthcare system.