The Employer's Guide Blog for Overseeing PBMs

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Get your Hand out of my Pocket!

Alecia Beth Moore made an insightful comment during a recent interview.  You may know Alecia better by her stage name Pink, the pop music star.  Alecia recently gave birth to her first child and like most new parents is very protective of her first born. Asked if she would like her child to become a pop star she stated very succinctly, “I just want her to be talented because the world is cruel too those whom lack talent.”  
I’ll take this one step further and say those who lack information and/or knowledge are at the mercy of the world.  This is true in all walks of life and the pharmacy benefit management industry is no exception.  In the past few days several events have occurred where a lack of knowledge would have deemed me as a patsy.

On Wednesday September 26, 2012 I picked up a rental vehicle from the Cleveland airport.  The original reservation called for a mid-size automobile.  Since I was driving approximately 100 miles to our warehouse, I wanted to keep gasoline costs reasonably low.  Hence the request for a small automobile.  Those of you whom travel quite a bit I’m sure appreciate the Hertz Gold and Avis Preferred services.  As I approached the space where my vehicle was parked I noticed that it was not a Chevy Cruze but instead a SUV!
My first thought was, “wow a complimentary upgrade.”  Then it dawned upon me that no one is renting these vehicles due to the high cost of gasoline.  A few years ago I couldn’t get a free upgrade even if I got on my knees and begged for it.  Now Avis is giving away free SUV upgrades. I, with a smug, walked to the customer service counter and kindly requested a compact or mid-size automobile.  This saved our company $100 in unnecessary travel cost during the four day rental.
This past Sunday, September 30, 2012, I spent with friends at a local bar watching the football games.  All went as planned including my having to pay for the tab.  Because most of my friends are single women, this isn’t a big deal.  All that changed when the bartender handed me the bill.  I knew he was a shady character from the outset and like many people in a business transaction will dupe you if the door is left open.

I had been watching the bartender all evening and noticed he was pouring drinks for customers different from what they originally ordered.  I’m assuming his logic was they’ve been drinking all day so no one will notice the difference between Smirnoff and Grey Goose.  So, I’ll charge you for the Grey Goose and pocket the difference. Nonetheless, my bill was a lot higher than it should have been and included a tip! I told him exactly what I owed -and why- saving myself $75 in the process. 

Lastly, I purchased an 8 x 4 cork board from for $145.00.  I was able to find this product after one of my employees couldn’t find it for less than $250.  I was anticipating delivery last week.  Our mail-order pharmacy warehouse has a strict policy of not opening the door for anyone unless we know beforehand to expect you.  It is a safety precaution designed to protect our employees.  The delivery company tried unsuccessfully twice to deliver the cork board. 
It turns out the delivery company was an independent driver without any brand or corporate markings on his vehicle.  As a result, our employees never opened the door and the driver didn’t leave a notice.  Also, they were looking for FedEx or UPS to deliver the product.  The delivery company finally called this week to say in order to redeliver the product we would incur an additional charge of $75!  Sorry, but we’re not paying it. They agreed to deliver at no cost due to the fact we were able to point out the driver didn’t bother to leave a notice.  You would think those systems were already in place. 

I saved more than $400 (on four transactions) in one week by just being diligent and not allowing companies to take advantage of us.  Imagine what could happen when tens of thousands of pharmacy claims are at stake.  You’d be surprised how similar deceptive practices are executed when prescription drug benefit claims are involved. For many companies, during each and every single pharmacy claim, a similar scenario plays out where their PBM “partner” is hiding significant cash flow. 

Traditional PBMs are able to hide cash flow through formulay steering, differential pricing and rebates (or lack thereof), for example.  The traditional PBM is taking advantage of your lack of information and is skimming off the top albeit legally.  Find a PBM willing to sign as a fiduciary.  Get the information or hire someone who has it then tell your traditional PBM, Get Your Hands Out Of My Pockets!

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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