Last week, my colleague wrote an in-depth analysis of pharmacy benefit managers (PBMs). In the article, he defined PBMs and detailed how one specific type of PBM, a fiduciary PBM, can help your organization and employees save on prescription drug costs. So, we know how a pharmacy benefit manager can boost your pharmacy benefits. But how do you improve your pharmacy benefit manager’s performance, if you already have one?
In this article, I’ll tell you about five methods you can use to improve the performance of your PBM and subsequently your pharmacy benefits as a whole. This improvement will ensure your organizations gets the best prescription drug prices possible. So, keep reading to find out the 5 ways your firm can boost its PBM’s performance.
How Can Your Firm Improve its PBM’s Performance?
1. Hire a Fiduciary PBM
The number one most essential method your company can use to boost your pharmacy benefits is to hire a pharmacy benefit manager. And, the best way to ensure quality performance from your PBM is to partner with a fiduciary PBM. A fiduciary, or “fee-only financial adviser,” pharmacy benefit manager brings more transparency to the PBM model. As a fiduciary, contracts negotiated between the PBM and clients and pharmacies are designed to maximize both understanding and transparency of your drug plan.
Basically, any contract negotiated by a fiduciary PBM is meant to encourage the best possible health and financial outcomes for the clients, their clients, the enrollees, and the patients. Generally, under a fiduciary model, the point is to reduce the conflicts of interests that can arise within the traditional PBM model.
PBMs gain no additional margin from favorable tier placement for high cost/revenue drugs. Coverage and pricing considerations are restricted only to the cost-benefit of the therapy itself. Any profits from this model, for PBMs, come exclusively from 100 percent disclosed administration fees.
2. Implement Step-Therapy
Step-therapy is another way your organization can improve the performance of your PBM. Step-therapy requires doctors first to prescribe a lower-cost medication (1st line therapy) before a more expensive brand name or specialty therapy is prescribed. Step-therapy helps disincentivize the use of high-cost, low-value prescription drugs. We’ll talk more about these drugs later but controlling their use is vital to improving your PBM’s performance.
3. Institute Clinical Reviews
A clinical review can help you determine which drugs your employees are using that cost more than they should. This process begins when clinician-consultants review overall pharmacy claims files and utilization to see which medications are being filled, and what’s being filled unnecessarily.
Like, step-therapy, these clinicians search for high-cost specialty or brand name drugs prescribed when there’s a lower-cost alternative available. The clinicians flag these medications then present the drug list to the employer and discuss the pros and cons of changing the Rx formulary to save your company money.
If you, the employer, elects to move forward with the clinician’s suggested change, the plan must notify both the prescribing physician and the patient. This notification alerts both the physician and the patient that a formulary update is imminent and lets them know about the alternative, lower-cost prescription.
4. Determine How You’ll Measure Effectiveness
Before you implement any decision in business, it’s essential to know how you will measure that decision’s success or failure. It’s the same for a pharmacy benefit manager. You must determine how your organization will measure the effectiveness of its PBM. Today, most PBMs measure their success by the volume of orders they fill, or its ability to deliver significant rebates.
But both measures can lead to misaligned incentives for your PBM. Instead, the real measure of success of a PBM should be its ability to serve patients and plan sponsors and lower overall costs of healthcare. Under a pay-for-performance program or a fiduciary PBM, you can ensure your PBM is rewarded when they fulfill their commitments, not every time they process a claim.
5. Cut Waste Out of Your Rx Supply Chain
One of the most vital factors in your PBM’s success is how your Rx plan and your PBM treat high-cost, low-value drugs. These drugs are often the most significant factors in your PBM’s or overall prescription plan’s performance. Examples of these high-cost, low-value drugs include:
- Me-too drugs – the immaterial tweaking of an ingredient that results in a “new” drug that adds no clinical value
- Combination drugs – medicines that combine two active ingredients into one pill
- Prescription drugs offered when over-the-counter alternatives are available
- Brand-name or higher-priced generic drugs offered when lesser-cost generics are available
One such medication, a combination drug Duexis, illustrates the severe impact of these high-cost, low-value drugs can have. Duexis, a combination of Pepcid AC and ibuprofen, costs $1,954 per month. If you were to buy drugs independently, over-the-counter, they would cost a combined $30 a month.
But Duexis often makes it onto PBM’s formularies because it produces a substantial rebate. Still, even with this rebate, employers pay nearly $900 per month for the drug. This prescription is a terrific example of how the rebate system and incentivizes PBMs to include high-cost, low-value drugs on their formularies.
We know in this country; prescription drug spending is one of the most significant factors in the ever-increasing cost of medical care. One of the best methods to address these rising costs is to partner with a pharmacy benefit manager. But if you do team up with a PBM, keep in mind these 5 methods you can use to improve your PBM’s performance. At the end of the day, improving your pharmacy benefits is about cutting high-cost, low-value drugs from your plan.
Researchers have found reducing these kinds of prescriptions could lead to $63 million in annual savings across just 15 plan sponsors. Depending on numerous factors, reducing your employees’ use of high-cost, low-value drugs could save your firm between 3 and 24 percent of your overall pharmacy spend.