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Pharmacy benefit manager

Designing and administering cost-effective prescription drug plans that meet the financial and health care needs of our customers and members

Person ordering prescription refill on mobile device

The impact of pharmacy benefit managers (PBMs)

As part of CVS Health®, CVS Caremark® plays a critical role in the health care system by negotiating low net costs for our customers while supporting safe and clinically effective products for consumers. Beyond traditional PBMs, we use an integrated model to increase access to care, deliver better health outcomes and help lower overall health care costs. 

Get to know pharmacy benefit managers

Pharmacy benefit managers, or PBMs, manage prescription drug benefits for clients ranging from health insurers and Medicare Part D drug plans to large employers. PBMs are one of the few parts of the prescription drug supply chain specifically dedicated to lowering costs.


Female ordering prescription refill on tablet

People are more likely to take their prescribed medications when they know they can afford them.
CVS Caremark® negotiates lower costs for our customers and expands coverage to affordable medications that people need to stay healthy. We are transparent about medication costs and prioritize a high quality and more affordable approach to health care.

Our approach begins with the latest clinical research, guidelines and best practices — and our formulary decisions are overseen by a committee of independent, unaffiliated clinical pharmacists and physicians. Across every therapeutic category, we strive to achieve low costs for our clients and their members. That means managing the two fundamental forces behind drug spending: price and utilization.

As one example of how we help lower out-of-pocket prescription costs, our members may use our proprietary online search tool for savings options that work with their prescription plan.

Female pharmacist organizing prescriptions

The basic services PBMs provide include:

  • Negotiating low drug costs and rebates with pharmaceutical manufacturers
  • Creating and administering retail pharmacy networks
  • Helping members understand the best use of pharmacy benefits
  • Developing and maintaining formularies, which are lists of covered drugs
  • Providing mail pharmacy and home delivery services
  • Ensuring providers have the latest clinical information to prescribe clinically appropriate medications
  • Processing pharmacy claims

Woman at home hanging prescription

CVS Caremark goes above and beyond these basic services: We provide adherence counseling to make sure members take medications as prescribed, help close gaps in care, support members with chronic and specialty conditions, provide disease management support, and more.

All in all, the goal of these added services is to help improve health outcomes, which helps lower long-term and overall health care costs. Almost half of our members use our digital tools to manage their prescriptions, find lower-cost alternatives and stay on track with their treatments.

With traditional medical health insurance, medical bills are covered by insurance benefits for hospital, doctors and other health care provider costs. Traditional medical health insurance also covers medications administered directly by the provider in the office or at the hospital.

The prescription drug benefit covers medications that are typically picked up at the pharmacy or delivered to the home.

PBMs work alongside health plans and employers to administer prescription drug benefits. Depending on a person’s insurance, they may be able to use their health insurance card when they pick up prescriptions at the pharmacy, or they may have a separate card specifically for prescription drug coverage.

For years, the pharmacy industry managed drug costs through market basket pricing — prices based on a basket of various medications, aiming to lower the cost of brand drugs by shifting value from generic drugs.

TrueCost, the pricing model by CVS Caremark®, reduces pricing disparities and helps members realize the maximum value of our purchasing power so they can take full advantage of their prescription drug benefits. When they stay on benefit, members get a connected experience with digital tools and clinical support, helping to improve their health outcomes.