The Employer's Guide Blog for Overseeing PBMs

The Definition of Oversee: to watch over and direct (an undertaking, a group of workers, etc.) in order to ensure a satisfactory outcome or performance.

Tuesday Tip of the Week: Lead with Transparency or a Non-Fiduciary PBM’s Pricing Analyst will Exploit Your Lack of Sophistication

In the PBM industry, ballooning occurs when one revenue stream is cut off only for the PBM to shift that lost revenue to a different source. One way non-fiduciary PBMs maximize ballooning is with the help of Pricing Analysts. Yes, it is true that large PBMs have pricing analysts on staff.
One of the core responsibilites of a PBM Pricing Analyst is to monitor revenue performing below thresholds and implement necessary tasks to bring performance to or above targets. Doesn’t it make sense then that if you are seeking better pricing from a PBM to start with the contract language and not higher rebates or discount guarantees? Here are some additional duties of a PBM pricing analyst.
  • Implements new processes, process improvements, and best practices related to pricing, guarantee monitoring, and ASO passback activities.
  • Creates and implements metrics and supports performance measures to establish performance objectives for revenue maximization and pharmacy pricing.
  • Creates tools and processes to monitor margin revenue, pricing accuracy, and client retention.
  • Implements pricing in the system related to margin.
  • Supports the Pharmacy Services team in implementing future revenue, member expansion and growth capacity.
  • Assists with developing pharmacy pricing training to underwriters and updates to underwriting guidelines.
During negotiations with a non-fiduciary PBM, you may win more pricing concessions but all you’ve really accomplished (without any material change in the contract language) is to make the pricing analysts job a little tougher. Let’s put it another way. Instead of 4th and inches, it is 4th and one to payday.

Click Here to View the Original Job Ad and Description
PBM Pricing Analysts are limited primarily by one thing in their quest to extract hidden cash flow from employers – Contract Language. The position of PBM Pricing Analyst is unnecessary when the PBM operates as a fiduciary or radically transparent service provider. Better yet, this position is ineffectual when employers, not just their independent consultants, across the country get more PBM education.
PBM Pricing Analyst is a full-time position dedicated to drive PBM top-line growth. Much of your non-fiduciary PBM’s margin occurs after you’ve signed on the proverbial dotted line. A non-fiduciary PBM will give the appearance of a better deal but rarely does it relinquish profits without also providing more transparency. Start with transparency then focus on spreadsheet analysis of pricing.
Pharmacy costs and PBM transparency are not mutually exclusive they are forever intertwined. When the non-fiduciary PBM’s hand is in the cookie jar, employers pay less when you are looking at the cookie jar and know full well how many cookies are in it.

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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