The Employer's Guide Blog for Overseeing PBMs

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A Federal Agency (CMS) has Requested Copies of our Purchase Invoices for Wholesale Prescription Drugs

The Centers for Medicare & Medicaid Services, the largest purchaser of prescription pharmaceuticals, is eliminating or at least leveling the playing for itself and patients.  CMS is collecting wholesale invoices from pharmacies across the country (see below).  
CMS will use a combination of calculus, statistics and probability to determine a national average acquisition cost for every prescription medication on its formulary.  It will then send out an RFP stating these are the prices (based upon the calculated acquisition costs) we’re willing to pay for prescription drugs listed on our formulary – take it or leave it!  
If you’re a self-insured employer or a broker this is exactly what you should be doing for clients and employees alike.  It doesn’t matter the size of your organization.  If you pay for PBM services accept nothing less than full transparency.  
In this case, that means paying only true acquisition costs for all prescription drugs and not a penny more.  If you need help in calculating and/or verifying acquisition costs get off your butt and send me an e-mail I’ll be happy to help.  In the meantime, read the letter sent to us by CMS. 
Information asymmetry occurs when one party has significantly more information than another.  More important, the party with more information takes advantage of its position.  In business, this often leads to a lack of transparency and abhorrent price disadvantages for purchasers.  
It’s quite simple, don’t do business with any PBM that isn’t willing to: (1) share all their price lists/wholesale invoices and (2) provide full audit rights.  If you would like a copy of the original letter simply send me an e-mail and we’ll get one out to you.

Tyrone Squires, MBA, CPBS

I am the proud founder and managing director of TransparentRx, a fiduciary-model PBM based in Las Vegas, Nevada. We help health plan sponsors reduce pharmacy spend, by as much as 50%, without cutting benefits or shifting costs to employees.

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