Typically, pharmacy benefit managers (PBMs) reduce drug-benefit costs up to 30 percent for more than 266 million Americans enrolled in private and public plans, most notably Medicare Part D. The PBM industry emerged in response to a wave of expensive new blockbuster drugs that began to come to market in the 1990s. Before then, very few patients had “pharmacy benefits.” Today, a patient with insurance coverage may pay a mere $10 copay for a drug that costs 10 times that much.

PBMs introduced a number of patient friendly innovations to reduce pharmacy costs and improve quality.

1. Negotiate discounts with drugstores

Reduce copays and other out-of-pocket costs. Today, there are 67,000 pharmacy locations — more than the number of Taco Bell, Kentucky Fried Chicken, McDonald’s, Burger King, PizzaHut, Wendy’s, Domino’s Pizza and Dunkin Donuts locations combined. In many cities, there are multiple drugstores on the same block. PBMs encourage these drugstores to compete by promoting the ones that are more affordable.

2. Negotiate price concessions from drug companies

Promote more affordable brand drugs and generics. PBMs design benefits for payors that encourage patients to use the least expensive option whenever it’s clinically appropriate.

3. Offer Amazon-style home delivery for chronic medications

This option is very popular with patients since it’s less expensive and much more convenient.

4. Use sophisticated specialty pharmacies to administer medicines

Treat life-threatening or disabling conditions like cancer, multiple sclerosis and rheumatoid arthritis. Unlike drugstores, specialty pharmacies employ highly trained teams of pharmacists, nurses and other clinicians to reduce the chance of harmful side effects and ensure the medicines are taken appropriately.

For PBM clients — the largest, most sophisticated health purchasers in the United States — the most effective way to use these tools is in a marketplace that promotes a high level of competition among drug companies and drugstores. More competition means lower prices and more savings for consumers and the organizations that provide their benefits.