The Vital Role of Information Technology Department in PBM Industry

In the modern healthcare landscape, the Pharmacy Benefits Manager (PBM) industry stands as a pivotal intermediary between patients, healthcare providers, and pharmaceutical companies. PBMs play a crucial role in managing prescription drug benefits for health insurance plans, ensuring cost-effective access to medications for millions of individuals. However, behind the scenes of this complex ecosystem lies a fundamental pillar driving efficiency, innovation, and seamless operations—the Information Technology (IT) department.

The convergence of healthcare and technology has transformed the way PBMs operate, and the IT department serves as the engine powering this transformation. From streamlining processes to safeguarding sensitive data, the IT team within a PBM organization plays a multifaceted role that directly impacts the quality of care delivered to patients and the effectiveness of prescription drug benefit management.

1. Infrastructure and Systems Management

At the core of every PBM’s operations lies a robust infrastructure comprising databases, networks, and software systems. The IT department is responsible for designing, implementing, and maintaining this infrastructure to ensure seamless connectivity and data accessibility across various stakeholders. From electronic health records (EHR) integration to claims processing platforms, IT professionals deploy and manage the technological backbone that supports the entire PBM ecosystem.

2. Technical Implementations with Third-Party Administrators

Within the Pharmacy Benefits Manager (PBM) industry, the Information Technology (IT) department plays a crucial role in managing technical implementations with third-party administrators (TPAs). This entails overseeing the integration of systems, data exchange protocols, and ensuring seamless connectivity between the PBM’s infrastructure and the systems utilized by TPAs. The IT team collaborates closely with TPAs to configure interfaces, establish secure connections, and troubleshoot any technical issues that may arise during the implementation process. By leveraging their expertise in software integration, network architecture, and data management, the IT department ensures that the partnership between the PBM and TPAs operates smoothly, facilitating efficient prescription drug benefit management and enhancing the overall customer experience.

3. Data Analytics and Business Intelligence

In an industry driven by data, PBMs rely on sophisticated analytics to identify trends, manage costs, and optimize patient outcomes. The IT department plays a pivotal role in developing and maintaining data analytics platforms that sift through vast amounts of information to provide actionable insights. By leveraging technologies such as artificial intelligence and predictive analytics, IT teams help PBMs make informed decisions regarding formulary management, medication adherence programs, and provider network optimization.

4. Security and Compliance

With the increasing digitization of healthcare data, ensuring the security and privacy of sensitive information is paramount. The IT department within a PBM organization is tasked with implementing robust cybersecurity measures to safeguard patient data from unauthorized access, breaches, and cyber threats. Moreover, IT professionals work closely with regulatory bodies to ensure compliance with stringent healthcare regulations such as the Health Insurance Portability and Accountability Act (HIPAA).

5. Digital Health Innovation

As healthcare continues to embrace digital transformation, PBMs are leveraging innovative technologies to enhance patient engagement and medication management. The IT department works to develop and deploy digital health solutions such as mobile applications, electronic Prior Authorization platforms, etc. These technologies not only empower patients to take control of their health but also facilitate real-time communication between healthcare providers, pharmacists, and insurance companies.

6. Customer Experience Enhancement

In an era where customer experience reigns supreme, PBMs are leveraging technology to streamline processes and enhance service delivery. The IT department plays a critical role in developing user-friendly portals, automated communication systems, and interactive tools that empower patients to navigate their prescription drug benefits with ease. By prioritizing usability and accessibility, IT professionals contribute to improving patient satisfaction and loyalty while driving operational efficiency within the PBM organization.

7. Collaboration and Integration

Effective communication and collaboration are essential for the seamless coordination of care within the healthcare ecosystem. The IT department acts as a catalyst for integration, facilitating interoperability between disparate systems used by pharmacies, healthcare providers, and insurance companies. IT professionals enable the seamless exchange of patient information, prescriptions, and clinical data across different stakeholders.

Conclusion

In the Pharmacy Benefits Manager industry, the role of the Information Technology department cannot be overstated. From infrastructure management to data analytics, cybersecurity, and digital innovation, IT professionals play a pivotal role in driving efficiency, enhancing patient care, and ensuring compliance within PBM organizations. As healthcare continues to evolve, the collaboration between IT and healthcare professionals will be instrumental in shaping the future of prescription drug benefit management and improving health outcomes for individuals worldwide.

Top Ten Pharmacy Benefit Manager Utilization Management Programs

Ranking the top utilization management (UM) programs used by Pharmacy Benefit Managers (PBMs) can be complex due to the proprietary nature of specific tools and strategies employed by different organizations. However, several key types of UM programs are commonly recognized as effective in managing pharmacy benefits and controlling costs while ensuring patient care. Here’s TransparentRx’s ranking of the top ten pharmacy benefit manager utilization management programs:

Pharmacy benefits must be carefully managed to ensure people receive cost-effective treatment, improving their well-being and helping them lead happier, longer lives. This also enables employers to maintain a healthy and engaged workforce. These UM programs form the core of what many top PBMs use to manage drug utilization effectively. Each program has its strengths and plays a critical role in balancing cost containment with the provision of high-quality care. The specific effectiveness and ranking can vary depending on the specific health populations managed and the overall strategy of the PBM.

Audit of the American Postal Worker’s Union Health Plan’s Pharmacy Operations [Weekly Roundup]

Audit of the American Postal Worker’s Union Health Plan’s Pharmacy Operations and other notes from around the interweb:

  • Audit of the American Postal Worker’s Union Health Plan’s Pharmacy Operations. “We found that the PBM overcharged the Carrier and the FEHBP $44,882,688 (including lost investment income) by not passing through all discounts and credit related to prescription drug pricing that were required under the PBM Transparency Standards found in the Carrier’s contract with the OPM. Specifically, our audit identified the following six findings that require corrective action. The findings occurred across all years of the auto scope unless otherwise noted.”
  • Why Are Cash Prices Lower Than Health Insurance Negotiated Prices? Growing evidence demonstrates a counterintuitive phenomenon in healthcare: the cash price is often cheaper than insurance prices for the same service or product. Cash prices are unilaterally determined by a provider, while insurance prices are bilaterally negotiated between a provider and an insurance company. Don’t insurance companies presumably possess more bargaining power than individual patients? Our study found that among common shoppable services—such as lab tests, imaging, and joint replacements—half of U.S. hospitals set cash prices lower than their median insurance negotiated prices. Cash price being cheaper than insurance prices has also been documented for prescription drugs.
  • Fiduciary Duty Update: PBM Audit is Now Mandatory Protocol. The revelation that a drug costing over $10,000 in the market could be sourced for $28.40 has sent shockwaves through the industry, illustrating a glaring oversight in PBM management. Auditing your PBM is not merely a best practice; it is a critical safeguard against financial inefficiency and legal liabilities. Audits reveal discrepancies in billing, conflicts of interest, and non-compliance with contract terms — issues that, if unaddressed, could lead to breach of fiduciary claims.
  • How GoodRx Helped Steal $7 From My Pharmacy. GoodRx, primarily known as a platform for obtaining prescription coupons and tracking drug prices, interacts with Pharmacy Benefits Managers (PBMs) in a way that’s distinct from traditional PBM operations. In essence, GoodRx leverages the existing PBM infrastructure to provide discounted prices directly to consumers, often bypassing the more traditional insurance-based prescription purchasing pathway. For benefits consultants and employers, understanding this interaction is crucial in advising on healthcare strategies that maximize both cost efficiency and patient outcomes. Employers need to consider how tools like GoodRx fit into a broader benefits design, particularly in terms of how they affect out-of-pocket costs for employees and the overall usage of pharmacy benefits managed under traditional PBM contracts.

Revolutionizing Pharmacy Benefits by Disrupting the Status Quo and Driving Down Costs, Watch On-Demand

In our webinar, “Revolutionizing Pharmacy Benefits by Disrupting the Status Quo and Driving Down Costs,” we delve into the innovative strategies reshaping the landscape of pharmacy benefits management (PBM). By challenging conventional approaches and implementing cutting-edge solutions, we’re driving down costs while enhancing patient outcomes.

Why You Should Watch:

  1. Gain Insight: Learn about groundbreaking methodologies transforming pharmacy benefits, equipping you with the knowledge to navigate this evolving industry.
  2. Cost Reduction Strategies: Discover practical approaches to reducing pharmacy costs without compromising the quality of care, crucial for businesses seeking to optimize their healthcare spending.
  3. Patient-Centric Solutions: Explore how our innovative techniques prioritize patient well-being, ensuring better health outcomes while containing expenses.
  4. Industry Disruption: Stay ahead of the curve by understanding the latest disruptions in the PBM sector and how they can benefit your organization.
  5. Fiduciary Standard of Care: Understand the importance of adopting a fiduciary standard of care in pharmacy benefits management, aligning with best practices and ethical standards.
Stand Out Among Your Peers

Who Should Watch:

  • Benefits Consultants: Enhance your expertise in PBM to better serve your clients and provide them with actionable strategies to control healthcare costs.
  • Human Resources Managers: Gain insights into innovative approaches for managing pharmacy benefits, helping you make informed decisions that benefit your employees and your bottom line.
  • Employers: Learn how to optimize your pharmacy benefits program to achieve cost savings while ensuring your employees receive high-quality care.
  • Healthcare Professionals: Stay abreast of industry trends and advancements in pharmacy benefits management, enabling you to deliver more effective patient care within your organization.

Watch on-demand as we revolutionize pharmacy benefits together, driving down costs while prioritizing patient well-being. Let’s disrupt the status quo and shape the future of healthcare together!

Pharmacy Benefit Design: Navigating the Nuances through Comparative Analysis

In today’s rapidly evolving healthcare landscape, managing pharmacy benefits is not just about containing costs—it’s about crafting a synergy of quality care, accessibility, efficiency, and participant satisfaction. At TransparentRx, we understand that every aspect of pharmacy benefit design can significantly impact the health and well-being of the participants it serves. Let’s delve into the four broad issues that underpin an effective pharmacy benefit design.

1. Quality: The Pillar of Care

Quality in pharmacy benefits is threefold: care structure, processes, and outcomes. A robust care structure is foundational, ensuring that participants have access to essential medications without unnecessary delays or hurdles. The process, from prescription to pill delivery, must be streamlined, clear, and consistently monitored for potential improvements.

Outcomes are the ultimate measure of quality. At TransparentRx, we prioritize the clinical effectiveness of the medications provided and the positive health outcomes for the participant. This includes not only the resolution of the condition being treated but also monitoring for potential drug abuse, interactions, and side effects.

2. Accessibility: Removing Barriers

Accessibility goes beyond the physical availability of medications. It encompasses the elimination of financial, transportation, and geographical barriers that participants may face. TransparentRx champions affordable options without sacrificing quality. Whether it’s negotiating better prices or embracing mail-order services, we ensure that medications are within reach, both geographically and financially.

Transportation and geographical challenges are addressed by a network of pharmacies and the use of innovative delivery methods. By enhancing our telehealth and mail-order services, we bring the pharmacy to the participant’s doorstep, no matter where they live.

Understanding the distinctions between effective and ineffective benefit design practices is crucial. Below, we present a table contrasting strong (good) examples of benefit design with practices that should be avoided (bad) for each of the four broad issues:

By recognizing the stark contrast between these examples, employers, brokers, and consultants can more effectively evaluate and select pharmacy benefit plans that align with the fiduciary standard of care and participant-centric values. TransparentRx stands ready to guide you through the intricacies of these issues, ensuring that your pharmacy benefit design is both cost-effective and highly beneficial to your participants.

3. Efficiency: Maximizing Resources

Efficiency in pharmacy benefit design means accomplishing plan objectives with the least expensive combination of resources—without compromising on quality. At TransparentRx, we leverage InsourceRx data analytics to understand usage patterns, eliminate waste, and prevent fraud.

We assess the therapeutic equivalents and generic options, ensuring the most cost-effective medications are available. By balancing the cost against clinical effectiveness, we provide a plan that respects both the participant’s health and the bottom line.

4. Participant Satisfaction: The Heart of Our Mission

The true measure of a successful pharmacy benefit design is participant satisfaction. It reflects the ease of using the plan, the quality of the interactions with pharmacy staff, and the clarity of information provided. TransparentRx takes pride in our Net Promoter Score (NPS) of 86, which is a testament to our commitment to participant satisfaction.

This score significantly surpasses the industry average NPS for pharmacy benefit managers, reflecting the exceptional experience participants have with our services. An NPS of 86 indicates that a vast majority of our clients are not just satisfied, but are enthusiastic advocates for our brand, confident in recommending our services to others.

Conclusion

Pharmacy benefits management is a complex, multifaceted endeavor. By focusing on quality, accessibility, efficiency, and participant satisfaction, TransparentRx crafts a pharmacy benefits plan that not only meets but exceeds expectations. Our commitment to a fiduciary standard of care ensures that every decision we make is in the best interest of the participants we serve—helping our nation look better, feel better, and live longer.

Reviewing PBM Alternative Pricing Models for CVS Health, ESI, and OptumRx [Weekly Roundup]

Reviewing PBM Alternative Pricing Models for CVS Health, ESI, and OptumRx and other notes from around the interweb:

  • Reviewing PBM Alternative Pricing Models For CVS Health, ESI, and OptumRx. PBM alternative pricing models are being rolled out by some of the biggest organizations in the industry in response to mounting political pressure, changing legislation, and the prevalence of industry disruptors. PSG has closely assessed the strategies put forward by CVS Health, ESI, and OptumRx regarding pharmacy reimbursement and client pricing models. We will take a deeper look at network contracting strategies like CVS CostVantage and ESI ClearNetwork in addition to client pricing strategies such as CVS Caremark TrueCost, ESI ClearCareRx, OptumRx Cost Advantage, and OptumRx Cost Clarity and share some considerations for how plan sponsors should address the changing pricing landscape.
  • GLPs Are the Latest Example of the Shift to Alternative Purchasing Models. Prior to the rollout of Medicare Part D in 2006, the Medicare population represented the largest out-of-pocket consumer group in the cash pay marketplace. Then it was the uninsured prior to the Affordable Care Act (ACA). Then, after the ACA exchanges and Medicaid expansion, the cash pay strategy turned to middle- and upper middle–class households, with the fewest regulatory restrictions, the most disposable income, and, importantly, the highest deductibles for drug coverage. Many of these individuals had to spend many thousands of dollars for first dollar coverage. A large swath of the American population has now become accustomed to not even bothering with their pharmacy benefit manager (PBM), and the first question that comes to mind isn’t “Does my insurance cover it?” but rather, “What’s the easiest and most convenient way for me to get a prescription for the drug I saw on my social media feed?”
  • Explainer: Why are US pharmacy benefit managers under fire? Separate bills aim to ban what is known as “spread pricing,” a practice in which PBMs charge health plans a larger amount for a drug than they pay out to pharmacies. Some are seeking more transparency under which the companies would be required to provide more information on their non-public negotiations. Rebates have also been a subject of proposed new government rules. The Trump administration sought in 2020 to make rebates illegal for Medicare prescription drug plans by removing the safe harbor protection that shields rebates from federal anti-kickback laws. The Biden administration delayed the rule until 2023 and Congress further delayed it until 2027.
  • How GoodRx Helped Steal $7 From My Pharmacy. GoodRx, primarily known as a platform for obtaining prescription coupons and tracking drug prices, interacts with Pharmacy Benefits Managers (PBMs) in a way that’s distinct from traditional PBM operations. In essence, GoodRx leverages the existing PBM infrastructure to provide discounted prices directly to consumers, often bypassing the more traditional insurance-based prescription purchasing pathway. For benefits consultants and employers, understanding this interaction is crucial in advising on healthcare strategies that maximize both cost efficiency and patient outcomes. Employers need to consider how tools like GoodRx fit into a broader benefits design, particularly in terms of how they affect out-of-pocket costs for employees and the overall usage of pharmacy benefits managed under traditional PBM contracts.

Price is Not Cost: Understanding the Real Drivers Behind Pharmacy Benefit Expenses

In the realm of pharmacy benefit management (PBM), grasping the full scope of costs is crucial for Directors of Benefits and CFOs who strive to optimize their healthcare investments. It’s essential to recognize that the “price” of drugs is not synonymous with “cost.” True cost management requires a nuanced understanding of four primary cost drivers: price, product mix, utilization, and cost share. Let’s delve into each of these components to provide a clearer strategy for managing pharmacy benefits effectively.

Price

Definition: The price is the amount paid for a drug to the manufacturer or pharmacy after accounting for rebates and discounts.

Components:

  • List Price: Manufacturer’s initial price for the drug.
  • Net Price: Actual price paid after subtracting rebates and discounts provided by manufacturers to payers and PBMs.
  • Markup: Additional costs added by pharmacies or PBMs.

Effective strategies to manage drug prices include negotiating better rebate terms, choosing generics or biosimilars where appropriate, and leveraging competitive bids for PBM contracts.

Product Mix

Definition: Product mix refers to the composition of prescription drugs dispensed under a benefit plan.

Components:

  • Generic Dispense Rate (GDR): The proportion of all dispensed prescriptions that are generics, which are typically cheaper than brand-name drugs, should be 88% or higher. Every 1% increase in GDR leads to 5% gross cost savings.
  • Therapeutic Alternatives: Use of clinically equivalent drugs that vary in price.
  • High-cost Drugs: Biologics and specialty drugs that significantly impact overall spending.

Strategies for optimizing the product mix involve increasing the generic dispensing rate, formulary management to encourage the use of cost-effective therapeutic alternatives and implementing step therapy policies, for example.

Price is Not Cost: Understanding the Real Drivers Behind Pharmacy Benefit Expenses
Table Summary of Pharmacy Benefit Cost Drivers

Utilization

Definition: Utilization measures the volume or frequency of drug dispensation under a health plan.

Components:

  • Prescription Volume: Total number of prescriptions filled.
  • Days Supply: Prescribed amount and the length of time for which a drug is dispensed.
  • Member Population Health: The overall health demographics of the covered population which influences disease prevalence and drug usage.

Managing utilization entails using data analytics to forecast trends, implementing medication therapy management (MTM) programs to mitigate risk, and employing utilization management tools like prior authorization. Prior authorization approval rates are lower than 70% for efficient pharmacy benefit management programs.

Cost Share

Definition: Cost share refers to the distribution of drug expenses between the insurance plan and its beneficiaries.

Components:

  • Deductibles: The amount a beneficiary must pay out-of-pocket before the health plan starts paying.
  • Copayments and Coinsurance: Fixed amounts or percentages of the prescription cost that a beneficiary is responsible for after meeting their deductible.
  • Out-of-Pocket Maximums: The maximum amount a beneficiary pays in a year, after which the plan covers 100% of additional costs.

To optimize cost sharing, strategies include adjusting plan design to influence drug choices through differential copays for generics versus brands and using tiered formularies to incentivize lower-cost options.

Conclusion

For Directors of Benefits and CFOs, understanding these four cost drivers and their components is critical not just for managing expenses, but also for improving patient outcomes without compromising care quality. By integrating strategic management of price, product mix, utilization, and cost sharing, organizations can achieve a more sustainable and efficient pharmacy benefit framework that upholds a fiduciary standard of care. This comprehensive approach ensures that costs are contained not by cutting corners, but by enhancing the value delivered to beneficiaries.

Mayo Clinic Employee Files Class Action Lawsuit Over High Health Care Costs [Weekly Roundup]

Mayo Clinic employee files class action lawsuit over high health care costs and other notes from around the interweb:

  • Mayo Clinic employee files class action lawsuit over high health care costs. The worker, who is unnamed in the lawsuit, is seeking reimbursement for the money they allege they overpaid for care that should have been reimbursed — as well as for the thousands of other Mayo Clinic employees and Medica customers they believe are similarly situated and paid more than they should have for care. The lawsuit alleges Medica, which administers Mayo Clinic’s self-insured plan, uses “deceptive, misleading, arbitrary” pricing methods that leave plan members in the dark about health costs and allow for inconsistent reimbursement rates, in violation of federal law and Medica’s fiduciary responsibilities.
  • Mark Cuban: Five Ways that Big PBMs Hurt U.S. Healthcare–And How We Can Fix It. #1 Zero transparency. The number one rule when contracting with PBMs is that you don’t talk about the PBMs and their contracts. They prevent everyone–providers, manufacturers, employers, and non-affiliated pharmacies—from making public or discussing their pricing terms or any aspect of their contracts. If you do, they’re happy to sue you.
  • Amid increased federal scrutiny, PBMs pivot strategy to further squeeze independent pharmacies. Pharmacy benefits managers (PBMs) are employing new strategies to squeeze independent pharmacies, even as the industry faces pressure from the federal government, which is looking for ways to curb healthcare’s middlemen and preserve competition in medicine distribution. Independent pharmacies have complained for years about unfair tactics used by PBMs to force them out of business, including underpaying for filled prescriptions and reimbursement clawbacks. It has gotten the attention of Congress, and the Federal Trade Commission (FTC) is in the middle of a probe with results due this year. Meanwhile, another tactic is starting to see an anecdotal increase: terminations.
  • It’s time for facts in the PBM debate. You’ve also likely heard recently from Mark Cuban, who has an emerging side hustle as a pharmacy expert. His company, Mark Cuban Cost Plus Drugs, has a narrow offering, and focuses on the cost of generic drugs. That’s a problem that has already been solved. Over the past decade, many organizations have built sophisticated businesses focused on reducing the cost of generic drugs in this country. The reality is, the Cost Plus offering is neither novel nor unique—it is a generic sourcing business that is 10 years too late. What’s more, it often lacks a consistent supply of products and regularly stocks treatments with short expiration dates, failing to offer the comprehensive and reliable service needed to deliver high-quality pharmacy benefits to a large patient population.

Formularies Through the Lens of Pharmaceutical Manufacturers: Impacts on Rebates

In the world of pharmacy benefits management, formularies stand as a cornerstone, guiding the dispensation of medications based on efficacy, safety, and cost-effectiveness. For pharmaceutical manufacturers, understanding the nuances of different formulary types is crucial, as these can significantly influence rebate agreements and market access. Today, we delve into five types of formularies through the lens of pharmaceutical manufacturers, including the progressive value-based formulary, to uncover how each affects the dynamic landscape of pharmaceutical rebates.

1. Open

Open formularies offer the widest range of drugs, imposing few restrictions. This inclusivity means pharmaceutical manufacturers face less pressure to provide steep rebates to secure formulary placement. However, this openness can lead to higher overall drug costs for payers.

2. Closed

Closed formularies represent the other end of the spectrum, listing a more restricted range of drugs. For manufacturers, securing a spot on these formularies often necessitates offering substantial rebates. The exclusivity can drive competitive pricing but might limit patient access to certain drugs.

3. Tiered

Tiered formularies categorize drugs based on cost-sharing levels. Drugs in lower tiers cost patients less, incentivizing manufacturers to offer competitive rebates for favorable tier placement. This structure encourages cost efficiency while maintaining a range of options.

4. Preferred Drug Lists (PDLs)

PDLs highlight a subset of drugs within a formulary, chosen for their value in terms of efficacy and cost. Manufacturers may need to offer rebates or demonstrate superior value to get their drugs listed as preferred. This list can influence prescribing habits significantly.

5. Value-Based

Value-based formularies prioritize drugs based on their overall value to patient health outcomes, potentially adjusting cost-sharing to encourage the use of more effective treatments. Manufacturers whose drugs demonstrate high value may gain favorable placement without the same emphasis on rebates. This approach aligns costs more closely with outcomes. Each formulary type presents unique advantages and challenges for pharmaceutical manufacturers, especially concerning the negotiation of rebates.

Conclusion

The relationship between formulary management and pharmaceutical rebates is a dynamic and complex one. For pharmaceutical manufacturers, understanding and navigating the different formulary types is crucial to their strategy for securing formulary placement and optimizing rebate agreements. From the perspective of TransparentRx, leveraging this understanding allows us to negotiate better terms, ultimately benefiting our members through access to effective and affordable medications.

As the healthcare landscape evolves, so too will the strategies around formulary management and rebate negotiation. Staying informed and adaptable is key to navigating these changes effectively, ensuring that we continue to meet the needs of our members while fostering sustainable relationships with pharmaceutical manufacturers.

AI-Driven Solutions Promote Medication Adherence [Weekly Roundup]

AI-Driven Solutions Promote Medication Adherence and other notes from around the interweb:

  • AI-Driven Solutions Promote Medication Adherence. A study conducted in 2019 showed that approximately 50% of the 187 million patients in the US health care system did not follow their medication plan as prescribed. This means they failed to adhere to the drug regimen or to take the medication for the entire prescribed duration. Adherence rates for most medications used to treat chronic conditions, such as diabetes and hypertension, usually fall in the range of 50% to 60%, even with patients who have good insurance and drug benefits. This rate of adherence leads to an estimated 125,000 avoidable deaths each year and $100 billion annually in preventable health care costs.
  • Mark Cuban: Five Ways that Big PBMs Hurt U.S. Healthcare–And How We Can Fix It. #1 Zero transparency. The number one rule when contracting with PBMs is that you don’t talk about the PBMs and their contracts. They prevent everyone–providers, manufacturers, employers, and non-affiliated pharmacies—from making public or discussing their pricing terms or any aspect of their contracts. If you do, they’re happy to sue you.
  • Amid increased federal scrutiny, PBMs pivot strategy to further squeeze independent pharmacies. Pharmacy benefits managers (PBMs) are employing new strategies to squeeze independent pharmacies, even as the industry faces pressure from the federal government, which is looking for ways to curb healthcare’s middlemen and preserve competition in medicine distribution. Independent pharmacies have complained for years about unfair tactics used by PBMs to force them out of business, including underpaying for filled prescriptions and reimbursement clawbacks. It has gotten the attention of Congress, and the Federal Trade Commission (FTC) is in the middle of a probe with results due this year. Meanwhile, another tactic is starting to see an anecdotal increase: terminations.
  • 5 ways to improve your PBM procurement process in 2024. Many self-funded plan sponsors struggle to manage the cost of pharmacy benefits and rely on non-transparent contract guarantees to hold PBMs accountable. Meanwhile, drug spending continues to compound at an astonishing rate in defiance of the savings promised during the procurement process. As a former pharmacy program director for a plan covering more than 16,000 lives, I can tell you that it is possible to stop the “games” PBMs play, control costs, and ensure that all contractual guarantees are met, especially in scenarios where a PBM won’t guarantee an all-in per member per month (PMPM) cost for the year. Understanding the problem is a part of the solution, but making meaningful changes to the way plan sponsors and brokers evaluate PBMs is where the real opportunity lies.