Prescription drug spending is a billion dollar expense for insurers and self-insured employers.
Allying with a pharmacy benefit manager may be tempting when looking at discounts, annual drug savings, promotion of generic drugs and cheaper prescription alternatives. They can also help payers facilitate enhanced care delivery. Potential cost savings generated by PBMs may include a 40 to 50 percent annual savings on health plan drug costs, a $941 reduction on costs per patient annually, and savings of $6 on every $1 spent for PBM services. The Pharmaceutical Care Management Association (PCMA) makes a strong case for contracting with PBMs. Read their arguments in HealthPayer Intelligence
On the risky side, PBM contracts are often difficult to comprehend, and financially benefit PBMs at a payer’s expense. The National Pharmaceutical Council (NPC) found that only 30 percent of employers understood the clauses of their PBM contracts, and 63 percent did not find these contracts to be transparent about their performance guarantees.
The NPC found
Fifty-eight percent of employers also believe that contracts are too complex, ambiguously worded, and often benefit PBMs at the expense of employers.
Experts from the Midwest Business Group on Health (MBGH) also argued that if employers don’t effectively hold PBMs accountable, then they could lose out on earnable revenues.
MBGH believes that employers/payers should make sure that dollar-amount rebates on prescription drugs “roll back” into the health plan, so that those dollars can be used to increase plan/benefit quality.
MBGH also found that PBMs can purchase a drug for an employer, and keep the profits if the co-pay for the medication is higher than the price of the drug.
Read about PBM accountability in another article in HealthPayer Intelligence.