Governor signs legislation banning PBMs from simultaneously owning pharmacies and other notes from around the interweb: Get Certified Now! Arkansas governor signs legislation banning PBMs from simultaneously owning pharmacies. Arkansas lawmakers in the Senate on Wednesday passed a bill that would stop pharmacy benefit managers (PBMs) from owning pharmacies and selling drugs retail in the state. The bill now heads to the governor's desk for her signature. PBMs are the middlemen who negotiate with insurance companies, manufacturers, and pharmacies to set drug prices. Where the controversy comes in is when PBMs also own their own pharmacies, creating what many believe is a conflict of interest. CVS officials said a new law restricting Pharmacy Benefit Managers from owning pharmacies will result in the closure of more than 20 Arkansas pharmacies. Overcoming Biosimilar Utilization Barriers. “The opportunities with all of these biosimilars are that they have the ability to improve patient access, new starts, persistence and adherence,” said panelist Alex Mersch, PharmD, an assistant director of ambulatory specialty programs at University of Iowa Health Care, in Iowa City. “For many organizations, especially if we look at it from the inpatient side, there’s a lot of opportunity to decrease drug costs by [replacing the reference product with] the biosimilar.” The Rise in Direct-to-Consumer Advertising of Prescription Drugs. From the marketing of drugs with low-added benefit to manufacturers’ inability to follow FDA guidelines, direct-to-consumer advertising for prescription drugs has increased in the US and is beginning to raise alarms. “Under FDA guidelines, pharmaceutical companies are supposed to provide a balanced view of drugs in advertising in terms of their risks and benefits,” said Jenny Markell, BA, PhD Candidate of Health and Public Policy at the Johns Hopkins Bloomberg School of Public Health. “They're supposed to avoid any misleading information. It's illegal, for example, to overstate a drug’s benefits, misrepresent data from studies, or make claims that are not supported by adequate evidence.” However, even after FDA attempts of holding manufacturers accountable, drug companies continue to skew the country’s perceptions of specific prescription drugs. ERISA Preemption: Impact on State PBM Laws. Pharmacy benefit managers (PBMs) play a role in the US healthcare system by negotiating drug prices and formulary placements on behalf of insurers and employer sponsored health plans. Recently, there have been concerns about certain PBM business practices, including drug pricing transparency and reimbursement rates. This has prompted numerous states to enact laws regulating PBMs. A key legal challenge to these state laws is whether ERISA preempts these laws. ERISA is a federal law that sets national standards for employer-sponsored health plans. One of its most important provisions is preemption, meaning that ERISA overrides state laws that attempt to regulate employer health plans directly. Why TransparentRx Is Your Trusted Partner for Smarter Pharmacy Benefits At TransparentRx, we specialize in delivering fiduciary pharmacy benefit management services that prioritize transparency, cost containment, and optimal patient outcomes. Our unique approach helps self-funded employers, benefits consultants, and health plan sponsors navigate the complexities of pharmacy benefits while reducing…

Not all red flags in PBM contract clauses are obvious. Some are buried in plain sight, phrased to sound harmless, even routine. But make no mistake, these clauses are often where profit hides, and where plan sponsors lose control. Here are five such clauses that deserve your full attention. 1. “Brand Effective Rate” Guarantees On the surface, a Brand Effective Rate (BER) seems like a safeguard—a guarantee you’ll get a certain discount off AWP for brand drugs. But here's the trap: PBMs typically define “brand” based on their internal classification, not by FDA or Medispan standards. That means drugs commonly accepted as generics may be counted as brands in your pricing guarantees. This manipulation boosts the PBM’s spread revenue and inflates your actual drug spend—all while appearing to honor the BER. Example clause: “PBM guarantees a Brand Effective Rate discount of 18% off AWP for brand drugs as determined by PBM’s internal classification system.” Fix: Demand clarity. The contract should reference a third-party source like Medispan for how "brand" and "generic" drugs are defined, not leave it up to the PBM. 2. “Custom Rebate” or “Non-Standard Rebate” Language Some contracts give PBMs the ability to retain rebates that fall outside the traditional formulary or performance structures. These might be labeled as “custom,” “specialty,” or “administrative” rebates. These aren’t small dollars. They’re just hidden from view. Example clause: “PBM will remit 100% of formulary rebates. PBM retains administrative, data, and market share incentives associated with manufacturer contracts.” Fix: Require full transparency and 100% pass-through on all rebates—no matter what label they carry. Avoid vague classifications. 3. “Market Check” Clauses Without Enforcement A contract might include a market check clause, promising to benchmark pricing mid-contract. But if there’s no mechanism to enforce it—or worse, the PBM controls the data source—it’s window dressing. Example clause: “PBM agrees to conduct a market check upon client request in the second contract year. PBM will assess market competitiveness and make adjustments where appropriate.” Fix: Ensure market checks are tied to independently verifiable data sources and come with actionable pricing adjustments. If it’s not enforceable, it’s useless. 4. “Sole Discretion” Language for Formulary or MAC Lists Clauses that give the PBM “sole discretion” to update the formulary or MAC pricing are dangerous. It gives them unilateral control over which drugs are covered and at what price—without accountability. Example clause: “PBM may, at its sole discretion and without prior approval, modify the formulary or MAC pricing schedule to reflect current market conditions.” Fix: Retain audit rights and require notification and approval for key formulary or MAC list changes. At a minimum, add a right to exit if the PBM acts against your financial interests. 5. “Audits Must Be Conducted by a Qualified Third Party” This one sounds reasonable—until you try to conduct an audit. PBMs often define "qualified" in a way that disqualifies anyone who might dig too deep or ask the right questions. Example clause: “Client may audit PBM once per contract year using a nationally recognized…

The Rise in Direct-to-Consumer Advertising of Prescription Drugs and other notes from around the interweb: Get Certified Now! The Rise in Direct-to-Consumer Advertising of Prescription Drugs. From the marketing of drugs with low-added benefit to manufacturers’ inability to follow FDA guidelines, direct-to-consumer advertising for prescription drugs has increased in the US and is beginning to raise alarms. “Under FDA guidelines, pharmaceutical companies are supposed to provide a balanced view of drugs in advertising in terms of their risks and benefits,” said Jenny Markell, BA, PhD Candidate of Health and Public Policy at the Johns Hopkins Bloomberg School of Public Health. “They're supposed to avoid any misleading information. It's illegal, for example, to overstate a drug’s benefits, misrepresent data from studies, or make claims that are not supported by adequate evidence.” However, even after FDA attempts of holding manufacturers accountable, drug companies continue to skew the country’s perceptions of specific prescription drugs. When middlemen own it all, patients pay the price. There’s mounting evidence that vertical integration drives up costs for patients and the government. A recent WSJ investigation showed PBMs are marking up the price of some specialty generic drugs dispensed at their specialty pharmacies by thousands of dollars. According to the FTC, pharmacies affiliated with the three largest PBMs made $1.6 billion on only two cancer drugs over the course of three years. Further, despite insurers and PBMs receiving significant rebates and discounts, often 50% or more, patients rarely benefit directly from these savings, according to the Congressional Budget Office’s Director of Health Analysis. Overcoming Biosimilar Utilization Barriers. “The opportunities with all of these biosimilars are that they have the ability to improve patient access, new starts, persistence and adherence,” said panelist Alex Mersch, PharmD, an assistant director of ambulatory specialty programs at University of Iowa Health Care, in Iowa City. “For many organizations, especially if we look at it from the inpatient side, there’s a lot of opportunity to decrease drug costs by [replacing the reference product with] the biosimilar.” Five ways to improve PBM procurement for clients. Nearly a decade ago, plan sponsors' pharmacy benefit conversations focused mostly on member satisfaction and plan compliance. Today, fiduciary duty comes first, then member satisfaction, compliance and, of course, GLP-1s, which is why employers are counting on their benefit advisers more than ever to guide them through Rx matters. Times have changed, which begs the question, "What does it take to ensure plan sponsors meet their fiduciary duty?" Putting the pharmacy benefits manager (PBM) business "out to bid" every few years isn't enough. Given heightened scrutiny of traditional PBMs and rising Employee Retirement Income Security Act (ERISA) liability risk, plan sponsors should regularly evaluate their PBM options, prioritizing strategies that lower total costs, improve member outcomes and safeguard long-term plan sustainability. However, issuing, evaluating, and managing requests for proposals (RFPs) from PBMs can be challenging. Why TransparentRx Is Your Trusted Partner for Smarter Pharmacy Benefits At TransparentRx, we specialize in delivering fiduciary pharmacy benefit management services that prioritize transparency, cost…

In pharmacy benefits, PBM "lesser of logic" determines how much the plan pays for a drug. On paper, it’s designed to protect the payer by ensuring the plan always pays the lowest price among a set of benchmark options. But PBMs often game the logic by controlling which benchmarks are included in the first place. What Is “Lesser of Logic”? It’s a pricing rule that compares multiple benchmarks for a drug claim and uses the lowest one to calculate plan cost. Typically, these benchmarks include: Benchmark TypeDescriptionAWP – DiscountAverage Wholesale Price minus a fixed % discountMAC PriceMaximum Allowable Cost set by the PBMU&C (Usual & Customary)The pharmacy’s cash priceCopaymentThe member's cost shareIngredient Cost + Dispensing FeePass-through model elementTable 1: Common Pricing Benchmarks Used in "Lesser of" Logic The logic should apply to all of these and select the lowest price for the third-party payer. But here's where the manipulation starts. BenchmarkValueAWP – 16%$112MAC Price$85U&C$92Copayment$10Ingredient Cost + Dispensing Fee ($2)$87Table 2: Transparent “Lesser of” Calculation Plan pays: $75 (MAC Price)Rationale: It's the lowest of all benchmarks. Same drug, same benchmarks, but the PBM contract excludes U&C pricing from the “lesser of” calculation. BenchmarkValueAWP – 16%$112MAC Price$85U&C$60 (excluded from logic)Copayment$10Ingredient Cost + Dispensing Fee ($2)$87Table 3: Opaque "Lesser of" Calculation Plan pays: $75 (ingredient cost only)Plan Should have paid: $50PBM pockets: $25 spread (assuming no dispensing fee spread 🙄)Problem: U&C was excluded, despite being the lowest actual price. Caveat Emptor: Copayments Must Be Part of “Lesser of” Logic The member’s copayment isn’t just a flat fee. It’s supposed to be the maximum they pay. If the ingredient cost is less than the copay, the member should pay the lesser amount. But PBMs often skip this check, allowing the member to overpay while the plan pays nothing. The technical term for this process is called a clawback. Example: Ingredient Cost: $8Member Copay: $10Proper Charge to Member: $8Charge to Plan: $0Total Paid: $8Overpayment if Copay Isn’t Adjusted: $2Who Keeps the $2? PBM or pharmacy, depending on contract setup This is a quiet but common form of margin capture. It punishes members and undermines trust in the plan. Fix: Require in your contract that member cost share be the lesser of: Flat copayCoinsurance amountTotal claim cost (ingredient + fee) That one line can stop millions in overpayments across large populations. Save Your Spot How PBMs Justify the Exclusion They may say U&C data is unreliable or inconsistent. In other cases, they quietly stop collecting or enforcing U&C pricing, allowing it to fade out of relevance. Why This Matters Over thousands of claims, this tactic inflates your drug spend without raising red flags. You’re led to believe you’re paying the lowest price, but you’re often not. What You Can Do About It Review your PBM contract. All four benchmarks, AWP – %, MAC, U&C, and copayment must be included in the lesser of logic.Request sample claims data. Spot-check random NDCs across pharmacies. Look for cases where U&C is lower than what was paid.Demand transparency. Know how…

Five ways to improve PBM procurement for clients and other notes from around the interweb: Get Certified Now! Five ways to improve PBM procurement for clients. Nearly a decade ago, plan sponsors' pharmacy benefit conversations focused mostly on member satisfaction and plan compliance. Today, fiduciary duty comes first, then member satisfaction, compliance and, of course, GLP-1s, which is why employers are counting on their benefit advisers more than ever to guide them through Rx matters. Times have changed, which begs the question, "What does it take to ensure plan sponsors meet their fiduciary duty?" Putting the pharmacy benefits manager (PBM) business "out to bid" every few years isn't enough. Given heightened scrutiny of traditional PBMs and rising Employee Retirement Income Security Act (ERISA) liability risk, plan sponsors should regularly evaluate their PBM options, prioritizing strategies that lower total costs, improve member outcomes and safeguard long-term plan sustainability. However, issuing, evaluating, and managing requests for proposals (RFPs) from PBMs can be challenging. Pharmacy in Focus Report: Navigating the GLP-1 conundrum. The pharmacy industry is at the epicenter of a worldwide transformative shift in health care. In the U.S., prescription drug spending has grown steadily to $723 billion in 2023.1 For commercial plans, Evernorth Research Institute found that prescription drug spend has seen increases ranging from 2.3% in 2019 to 8.9% in 2024. Key drivers of this trend include rising rates of chronic conditions, persistent drug price inflation and the rapid pace of pharmaceutical innovation, including expanding drug indications. In 2025 and beyond, while we anticipate a gradual tapering of the rate of spending increases, spending levels will remain high, increasing above projected inflation rates and creating a volatile environment that will continue to impact individuals, providers, plan sponsors and communities. The Future of PBMs in 2025: AI, Regulations, and Transparency Initiatives. Pharmacy benefit managers (PBMs) play a critical role in the US health care system by managing prescription drug benefits for insurers, government programs, and employers. However, the industry faces growing scrutiny over pricing transparency, rebate structures, and patient access to medications. As we move into 2025, the PBM landscape is undergoing significant transformation driven by regulatory changes, artificial intelligence (AI) integration, and transparency initiatives. In 2024, the Biden administration and Congress introduced several measures to increase PBM transparency and reduce prescription drug costs. Regulatory bodies such as the Federal Trade Commission (FTC) and Centers for Medicare & Medicaid Services (CMS) have intensified investigations into PBM pricing practices, particularly spread pricing, and rebate structures. The Endless Opportunities ChatGPT Creates for Pharmacists. With the recent rise of artificial intelligence (AI), not only in the pharmacy but across society, major players within the AI space have designed technology possible for any human being to adapt. One of the most notable examples is ChatGPT, an AI language model capable of answering straightforward questions with detailed answers. “ChatGPT is an AI language model capable of responding in straightforward language to medication-related questions,” wrote authors of a study published in the Journal of the American Pharmacists…

Medical specialty drugs are among the fastest-growing cost drivers in healthcare, demanding a more strategic approach to reimbursement. Without proper oversight, self-funded employers and plan sponsors can overpay for these high-cost therapies, leading to unnecessary financial strain. Optimizing medical specialty reimbursement presents significant opportunities for plan sponsors to reduce medical benefit drug costs while maintaining clinical effectiveness. Clinical Effectiveness Ensuring clinical effectiveness means aligning medical specialty drug reimbursement with evidence-based protocols. This requires a framework that prioritizes therapies with proven outcomes and avoids unnecessary utilization. Establishing clinical guidelines and enforcing prior authorization policies can help curb waste while ensuring patients receive the right medication at the right time. Pricing Validation: Paid vs. Billed A frequent source of waste in specialty drug reimbursement is the gap between what is billed and what is ultimately paid. Providers may bill significantly higher amounts than negotiated contract rates, leaving employers at risk of overpayment. Rigorous auditing of claims and automated pricing validation tools can help identify discrepancies and ensure plan sponsors pay only what is contractually obligated. Pricing Validation: Paid vs. Contract Beyond billed versus paid amounts, discrepancies also exist between what is paid and the contracted rate with manufacturers, PBMs, or other intermediaries. Implementing real-time pricing validation tools ensures that payments adhere to contract terms, reducing financial leakage and preventing unnecessary markups. Employers should demand transparency from their vendors and hold them accountable for contract compliance. Dose Optimization One of the most overlooked opportunities in medical specialty reimbursement is dose optimization. Many specialty drugs have flexible dosing options, yet providers often prescribe in a manner that maximizes revenue rather than efficiency. For example, if a drug is available in multiple vial sizes, using the optimal combination can reduce waste and lower costs. By requiring dose rounding policies and leveraging clinical pharmacist oversight, employers can avoid overuse and ensure cost-effective dosing strategies. Dose Optimization Example: Depending on the pharmacy, the potential for even greater savings exists Quantity Limits Implementing quantity limits on specialty medications prevents excess dispensing and waste. Specialty drugs are often high-cost, and without proper safeguards, patients may receive more medication than clinically necessary. By setting quantity limits based on FDA-approved indications and real-world utilization data, plan sponsors can minimize waste and prevent unnecessary costs. Medical Drug Rebates Rebates are a critical component of specialty drug reimbursement, yet they often remain opaque. Employers should demand full visibility into rebate agreements and ensure that all negotiated discounts are passed through. Fiduciary PBMs play a crucial role in securing transparent rebate structures that lower medical benefit drug costs while maintaining patient access to essential therapies. Medical Formulary Management A well-structured medical formulary helps steer utilization toward the most cost-effective therapies. By excluding high-cost drugs with limited clinical value and promoting biosimilars or lower-cost alternatives, formulary management can significantly reduce specialty drug spending. Employers should work with PBMs that take a fiduciary approach to formulary design, ensuring that decisions are based on clinical and financial value rather than hidden incentives. Site of Care Management Where…

Merck Lowered the Price of Januvia—Insurers Dropped It from Formularies and other notes from around the interweb: Get Certified Now! Merck Lowered the Price of Januvia—Insurers Dropped It from Formularies. In a move that should have been great news for patients, Merck significantly reduced the price of its blockbuster diabetes drug, Januvia (sitagliptin). However, instead of benefiting from the savings, many insured patients are discovering that their insurance plans no longer cover it. The culprit? Pharmacy Benefit Managers (PBMs)—powerful intermediaries that negotiate drug prices on behalf of insurance companies—have removed Januvia from their formularies. Those same powerful intermediaries are the latest in the hot seat for their predatory behavior in the United States health system. PBMs have been found to make coverage decisions based on their financial incentives rather than patient access to affordable medication. Walgreens Goes From $100 Billion Health Giant to Private-Equity Salvage Project. Customers bought more household items online at sites such as Amazon.com, instead of Walgreens’s more than 8,000 stores across the U.S. The pharmacy chain inked deals with other drug suppliers and doctors' offices, but stood pat while rivals, including CVS and Express Scripts, merged with big health insurers, gaining control of the medical-reimbursement purse strings that were squeezing pharmacies. Walgreens cash flow sagged, its debt piled up and shares sank. And on Thursday, Walgreens was sold to private-equity firm Sycamore for $10 billion, down a staggering 91% from its $106 billion peak in 2015. The storied pharmacy chain—which became a ubiquitous seller of everything from diabetes injections to nail files as retailers consolidated across the U.S.—fell after it neglected to keep up with customer preference to buy online and failed to navigate the fierce competition and intense cost pressures of healthcare. The Endless Opportunities ChatGPT Creates for Pharmacists. With the recent rise of artificial intelligence (AI), not only in the pharmacy but across society, major players within the AI space have designed technology possible for any human being to adapt. One of the most notable examples is ChatGPT, an AI language model capable of answering straightforward questions with detailed answers. “ChatGPT is an AI language model capable of responding in straightforward language to medication-related questions,” wrote authors of a study published in the Journal of the American Pharmacists Association (JAPhA). “ChatGPT may assist clinicians in analyzing clinical cases and become a potential tool for supporting pharmacists in providing medication therapy management (MTM) and other health services.” PBM Reform: Tackling Transparency, Pricing, and Patient Access. Pharmacy benefit manager (PBM) reform has become a substantial topic of debate for the past decades as patients and health care providers advocate for improved transparency, fair pricing, and better access to critical therapies. PBMs occupy a central role in the drug price supply chain, acting as intermediaries between drug companies, insurers, and pharmacies to determine which drugs will be most available and what they will cost. The top 3 PBMs control 80% of the national market, giving them significant power to negotiate drug prices and rebates, create formularies, determine…

Pharmacy benefit managers (PBMs) play a critical role in managing prescription drug costs for employers, yet many benefit decision-makers struggle with how to compare PBM proposals. The lack of clarity often results in higher costs, misaligned incentives, and poor contract terms. If you’re a PBM consultant, director of benefits, or benefit broker, understanding the differences between traditional, pass-through, transparent, and fiduciary PBMs is essential to making informed recommendations. Here’s how each model operates and why the distinctions matter. Traditional PBMs: Profits Over Transparency Traditional PBMs operate under a spread pricing model, where they charge plan sponsors more for drugs than they reimburse pharmacies. They also retain a portion of manufacturer rebates instead of passing the full amount back to the employer. While they claim to reduce pharmacy costs, the reality is that their financial incentives are misaligned with the employer’s goal of cost containment. The lack of visibility into contract terms allows traditional PBMs to generate excessive margins at the expense of plan sponsors. Table 1: PBM Business Models Explained Pass-Through PBMs: A Step Forward, But Not Enough Pass-through PBMs promote transparency by committing to pass all rebates, discounts, and pharmacy reimbursements directly to the employer. However, this model does not necessarily eliminate hidden fees. Some pass-through PBMs still engage in practices such as administrative fees or spread pricing under different labels, making it crucial to scrutinize contract language carefully. Transparent PBMs: More Clarity, But Still Not Fully Aligned Transparent PBMs provide greater visibility into pricing and contractual terms, offering more straightforward fee structures. However, transparency alone does not guarantee fiduciary alignment. Some transparent PBMs still derive profits from administrative fees or other undisclosed revenue streams. While they disclose costs more openly than traditional or pass-through models, employers must still verify that the PBM’s financial incentives align with their best interests. Fiduciary PBMs: The Gold Standard A fiduciary PBM is contractually obligated to act in the best interests of the plan sponsor and its members. Unlike traditional, pass-through, or transparent PBMs, fiduciary PBMs fully disclose all revenue sources, eliminate spread pricing, and pass 100% of rebates back to the employer. They charge a flat administrative fee for their services, ensuring their profit does not depend on inflated drug costs or hidden fees. This model creates true alignment between the PBM and the employer, leading to lower overall costs and better outcomes. Why Employers Struggle to Differentiate PBM Proposals Misleading Terminology: PBMs often use terms like "pass-through" and "transparent" to appear cost-effective, but their contracts may still include hidden fees.Complex Contracts: PBM agreements are notoriously difficult to decipher, filled with clauses that allow for profit retention through indirect means.Focus on Rebates Instead of Net Costs: Many decision-makers fixate on rebate amounts rather than overall drug spending, failing to see how lower ingredient costs can save more money than high rebates.Inconsistent Pricing Structures: Without standard pricing models, comparing PBM proposals side-by-side is challenging. How to Cut Through the Confusion Demand a Fiduciary Standard: If a PBM refuses to sign a fiduciary contract,…

The Benefits and Challenges of Subcutaneous Infusion in Cancer Care and other notes from around the interweb: Get Certified Now! The Benefits and Challenges of Subcutaneous Infusion in Cancer Care. Subcutaneous (SC) injection in cancer treatment is an emerging administration method, carrying with it both benefits and challenges for patients and health care providers. The evolution of intravenous (IV) to subcutaneous (SC) chemotherapy has resulted in significant cost savings for patients and reduced administration times, easing hospital burden and helping improve resource allocation. Despite these benefits, regulatory and payer challenges remain. In a presentation at the ACCC 51st Annual Meeting & Cancer Center Business Summit in Washington, DC, Raghava Induru, MD, thoracic oncologist and director of operations at Atrium Health Advocate Aurora, Levine Cancer Institute, emphasized the need for better drug development, clinical trials, and payer acceptance, as well as a multi-faceted approach to optimize SC administration and improve patient experience. Walgreens Goes From $100 Billion Health Giant to Private-Equity Salvage Project. Customers bought more household items online at sites such as Amazon.com, instead of Walgreens’s more than 8,000 stores across the U.S. The pharmacy chain inked deals with other drug suppliers and doctors' offices, but stood pat while rivals, including CVS and Express Scripts, merged with big health insurers, gaining control of the medical-reimbursement purse strings that were squeezing pharmacies. Walgreens cash flow sagged, its debt piled up and shares sank. And on Thursday, Walgreens was sold to private-equity firm Sycamore for $10 billion, down a staggering 91% from its $106 billion peak in 2015. The storied pharmacy chain—which became a ubiquitous seller of everything from diabetes injections to nail files as retailers consolidated across the U.S.—fell after it neglected to keep up with customer preference to buy online and failed to navigate the fierce competition and intense cost pressures of healthcare. The Endless Opportunities ChatGPT Creates for Pharmacists. With the recent rise of artificial intelligence (AI), not only in the pharmacy but across society, major players within the AI space have designed technology possible for any human being to adapt. One of the most notable examples is ChatGPT, an AI language model capable of answering straightforward questions with detailed answers. “ChatGPT is an AI language model capable of responding in straightforward language to medication-related questions,” wrote authors of a study published in the Journal of the American Pharmacists Association (JAPhA). “ChatGPT may assist clinicians in analyzing clinical cases and become a potential tool for supporting pharmacists in providing medication therapy management (MTM) and other health services.” PBM Reform: Tackling Transparency, Pricing, and Patient Access. Pharmacy benefit manager (PBM) reform has become a substantial topic of debate for the past decades as patients and health care providers advocate for improved transparency, fair pricing, and better access to critical therapies. PBMs occupy a central role in the drug price supply chain, acting as intermediaries between drug companies, insurers, and pharmacies to determine which drugs will be most available and what they will cost. The top 3 PBMs control 80% of…

Many directors of benefits review their PBM’s reports and assume the numbers tell the full story. But without understanding the fundamental calculations behind key performance metrics, it’s easy to miss hidden costs and misleading figures. PBMs often present data in ways that obscure true performance, making it difficult to assess whether you’re getting the best value. To take control of your pharmacy spend, you need to know not just what to measure, but how those numbers are calculated. Here are six PBM performance metrics every director of benefits must understand. Figure 1: Impact of SDR Changes on Plan Spending ($10 Million Annual Spend) Specialty Dispensing Rate (SDR) is defined as the percentage of all dispensed prescriptions that are specialty drugs. Specialty drugs are high-cost medications used to treat complex, chronic conditions such as cancer, rheumatoid arthritis, and multiple sclerosis. These drugs often require special handling, administration, or monitoring. Figure 1 assumes an average cost of $8500 per 28-day supply for a specialty drug claim and $100 for a non-specialty prescription drug claim. Goal < 2.5%.Generic Effective Rate (GER) is the average percent discount off the AWP for all generic drugs whether reimbursed at MAC, usual and customary pricing, or AWP discount. Because nine out of ten dispensed drugs are generic, the GDR performance metric is especially important. It can be difficult to catch where you are losing money until it is too late. You want to catch overpayments early enough to make the proper adjustment(s). Continuously monitor your GER so any overpayments to PBMs don't pile up. Analyze performance by channel i.e. retail 30, retail 90 etc. If your pricing benchmark is NADAC, back in the ingredient cost + professional dispensing fee to calculate the NADAC effective rate (NER). Goal > 88%.Generic Dispense Rate (GDR) or generic dispensing ratio is the number of generic fills divided by the total number of prescriptions. GDR is a standard performance metric on which our formulary manager is regularly evaluated. For every 1% increase in GDR a plan can expect to realize a 5% reduction in gross drug spend! Both GDR and GSR are indicators of how well clinical programs are performing. For example, loose utilization management will produce a poor (i.e. 84%) GDR. Goal > 90%.Proportion Days Covered (PDC) is a commonly used metric in pharmacy benefits management to measure medication adherence. It represents the percentage of days within a specified period (usually 6 or 12 months) during which a patient has access to their prescribed medication. Unlike the Medication Possession Ratio (MPR), PDC accounts for overlapping prescriptions and is capped at 100%, making it a more reliable indicator of adherence. Goal > 80%.Total Cost of Care (TCOC) in pharmacy benefits is the overall financial impact of prescription drug spending on a health plan, factoring in both direct and indirect costs. It goes beyond just drug prices and rebates to include medical cost offsets, patient adherence, PBM cost-shifting tactics, utilization management effectiveness, and member cost-sharing. A low pharmacy spend doesn’t always mean lower…