Medical vs. Pharmacy Benefit: Understanding How Drugs Are Managed

Members may receive medications through either their medical benefit or their pharmacy benefit—and while the drug itself may look the same, how it is covered and managed can be very different. Understanding these differences helps employers, providers, and members set expectations around access, cost sharing, and care coordination.

How drugs are covered

• Pharmacy benefit drugs are typically medications that members fill at a retail pharmacy, specialty pharmacy, or through home delivery. These are most often self‑administered, such as oral tablets, injections, or inhalers.
• Medical benefit drugs are usually medications administered by a healthcare professional in a clinical setting, such as a hospital, infusion center, or provider’s office. These are often provider‑administered therapies.

How coverage decisions are made

Drugs covered under each benefit follow different review and approval pathways:

• Pharmacy benefit
  • Managed using formulary drug lists
  • Reviewed for clinical effectiveness, safety, and value
  • May include tools like prior authorization, step therapy, or quantity limits
  • Cost sharing is typically based on formulary tier (copay or coinsurance)
• Medical benefit
  • Managed under medical policy
  • Coverage is based on medical necessity and clinical criteria
  • Prior authorization is commonly required before treatment
  • Cost sharing generally follows the medical benefit structure (deductible and coinsurance)

Why the benefit assignment matters

Where a drug is covered can affect:

• Member cost sharing – Pharmacy and medical benefits often have different deductibles and cost‑sharing rules
• Site of care – Some therapies may be available in multiple settings, and coverage rules help guide appropriate use
• Utilization management – Pharmacy and medical benefits apply different clinical review processes
• Care coordination – Aligning the right benefit with the right setting supports safe, effective treatment

Supporting safe and appropriate use

Across both benefits, drug management decisions are designed to:

• Promote evidence‑based treatment
• Encourage the use of clinically appropriate and cost‑effective therapies
• Maintain access to medically necessary medications
• Ensure consistency with regulatory and accreditation requirements

What members should do

Members are encouraged to:

• Review their benefit documents to understand how a medication is covered
• Talk with their provider if they have questions about treatment options
• Contact customer service before starting a new therapy if coverage is unclear

Clear benefit design helps ensure medications are covered in the most appropriate way—supporting better health outcomes while managing costs responsibly.

Premera Preferred Denosumab Biosimilars Update

Premera continues to advance the use of biosimilars as a way to improve affordability while maintaining access to clinically appropriate treatments. Beginning August 7, 2026, Premera will update preferred products within the denosumab class.

New preferred denosumab biosimilars

The following biosimilars will be designated as preferred:

• Enoby (denosumab-qbde)
• Xtrenbo (denosumab-qbde)
• Bildyos (denosumab-nxxp)
• Bilprevda  (denoxumab-nxxp)

These products are FDA‑approved biosimilars to reference denosumab products and meet Premera’s clinical and safety standards.

What this means for members and providers

• Clinical criteria will remain consistent with current denosumab coverage and medical necessity requirements.
• For members currently using a reference product, there will be advance notifications and alignment of authorizations where applicable.
• Both pharmacy and medical benefit workflows are included in this update to support continuity of care.

Why Premera promotes biosimilars

Biosimilars are rigorously reviewed by the FDA and shown to be highly similar to their reference products with no clinically meaningful differences in safety or effectiveness. Premera’s biosimilar strategy focuses on:

• Encouraging market competition
• Reducing drug costs for employers and members
• Preserving access to medically necessary biologic therapies

Providers are encouraged to review upcoming communications for detailed guidance prior to the effective date. Members with questions about coverage are encouraged to contact customer service for support.

Read the full formulary update.