Pharmacy Cost Management: 5 Tips for Managing Your Pharmacy Benefits Partner

Pharmacy Cost Management: 5 Tips for Managing Your Pharmacy Benefits Partner

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Now, more than ever, your pharmacy benefit manager can be a critical partner in controlling your health care costs. And, like any successful partnership, this one requires trust, transparency and goal alignment. Here are five tips for managing your relationship with your PBM.

    1. Make sure you have a strategy for addressing specialty medication utilization. Whether you’re considering expensive new specialty drugs or biosimilars, you need to have a clear plan that you and the PBM agree upon. It should include looking at your formularies, prior authorization requirements, step therapy programs and rebates. Also, consider how you’re monitoring member compliance. While the PBM may have a standard operating procedure, you deserve to know what it is and be able to adjust it to meet your organization’s budget, culture and employee retention goals.
    2. Understand how your contract provisions are affecting your bottom line. Every industry has its own terminology and ways of writing contracts. If you aren’t careful, you can get hurt by the terminology in your PBM contract. For example, generic meds can be single-sourced or multi-sourced. When a drug becomes available as a generic for the first time, it starts with one manufacturer (single source), and you won’t see much of a discount for the first nine to 12 months. Some PBMs will put these in their brand discount bucket – offering a flat 15% or 16% off. But if they’re in the generic discount bucket instead, you can get discounts up to 80%, depending on the Maximum Allowable Cost list. If your PBM prices a single-source generic drug as a brand, you may be paying too much. And, your member may be paying the generic copay rather than the brand copay, while you pick up the extra cost.
    3. Keep your pricing and rebates up to date. Most PBM contracts are three years long, and that’s too long to be locked into pricing. Better discounts and rebates are always becoming available. We’ve seen a huge shift in the last 24 to 36 months, and many employers are sitting on the sidelines, unable to take advantage of new savings, because they’re stuck in an inflexible contract.You can address this in one of two ways: insist on one-year contracts or build in a market check every 12 to 18 months. For example, you can set a price change threshold – say 1% to 3% – at which the PBM will match the market rate change or let you out of the contract.
    4. Know the pros and cons of carving your PBM out. Some carriers automatically bundle pharma into their contracts, which can make managing the plan easier for you. But you may have a good case for carving your pharmacy benefits out. Managing them directly gives you greater control over decisions about formularies, pre-authorizations, step therapies and other conditions.
    5. Pay attention to medical channel management. Certain drugs can be covered either under the medical plan or under the pharmacy plan. For example, some medications for rheumatoid arthritis have traditionally been given by injection in the provider’s office, so they’re covered under the medical plan. This leaves room for the provider to up-charge on the medication and divert any rebates offered by the manufacturer. You can potentially cover those medications on the pharmacy side, where you can have more control and reap the savings yourself.

    Remember, you are the customer, and you have a right and a responsibility to work with your carrier or PBM to protect the best interest of your organization and your members. That includes having visibility into pricing and channel decisions while working together in a way that allows both organizations to win.

    By Tracy Johnson, Director of Pharmacy Benefits, Employee Benefits

    See Also:

    Pharmacy Cost Management: Can You Benefit From Recent FDA Guidance On Biosimilar Replacements?

    Benefits Communication: Tools You Can Use To Boost Engagement

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