What is considered a major revenue source for PBMs when making money?

Administrative fees represent a significant revenue source for Pharmacy Benefit Managers (PBMs). These fees are charged to health plans and employers for managing their prescription drug benefits. PBMs negotiate with drug manufacturers and pharmacies to provide efficient and cost-effective access to medications, and in return, they receive fees for their services.

The management of pharmacy benefits includes various administrative tasks, such as processing claims, managing formularies, and ensuring compliance with both federal and state regulations. By performing these services effectively, PBMs provide value to health plans and employers, justifying the administrative fees they collect.

While discounted prices on drugs, marketing campaigns, and patient co-payments can contribute to a PBM's overall revenue, they are not typically considered as major revenue sources in the same way that administrative fees are. Discounted drugs can actually reduce out-of-pocket costs for health plans and patients, but the negotiation processes are a service for which PBMs charge administrative fees. Therefore, the correct answer emphasizes the importance of these fees as a primary revenue stream.