PBM - Cliff Notes History/Wall Street Viewpoint

1. PBM 101
Pharma Services
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2. PBM 101 – Cliff Notes version
• Pre-Electronic
– Shoebox process – patients submitted Rx claim forms to insurance companies/employers
– Pharmacy Benefit Management introduced
• Process claims on behalf of insurance companies and self employers
• Pharmacies: (UCF) Universal Claim Forms / Patients: Direct Claim Forms
• 1980’s
– Electronic Claims processing (POS) introduced - similar to running a credit card
– Pharmacy claims processed within 10 to 20 seconds
– Transition from paper claims to electronic
• 1990’s
– Running 200K-500K claims daily
• Modems for claims
• 6 second barrier broken
– Bi-product – DATA – Rich Claim Data
– Pharma Services is born – offering ‘pull through’ services to pharmaceutical manufacturers
• Today
– One million plus claims daily / Claims under 2 seconds
– PBM and Retail - one billion claims annually
– Offer Patient, Physician, and Retail ‘pull through’ channels
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3. PBM Business: Wall Street Viewpoint
Disease Mgmt, Programs, Special Services
Shared Rebates
Client Adjudication Fee
PBM Rebates
Cost of Drug/
Dispensing Fee
Mail-Order Mail-Order Pharma Cos.
Pharmacy Specialty
Mail-order Inventory
Members
Dispensing Cost of Drug Drug Usage Data Education
Fee Compliance Programs
Pharmacy
3 ©2010 Caremark. All rights reserved. CVS Caremark proprietary and confidential information. Not for distribution without written permission from CVS Caremark.