Negotiating contracts with third party administrators of prescription drug programs known as pharmacy benefits managers can be a difficult and confusing process, and it's made all the more challenging when employers don't have all the information they need upfront.
Like in any negotiation, more information available to the buyer creates the best chance of ensuring a fair, transparent deal. In pharmacy benefits management, PBMs have reaped the benefits of contract negotiations for years to increase their bottom line. Now, there's a new tool available to employers to level the playing field.
The contract negotiating tool, produced by Pharmacists United for Truth and Transparency with research contributions from the Harrison Institute for Public Law at Georgetown University, offers an in-depth look at the complexity of negotiating pharmacy benefits and includes information on the role of PBMs, common problems employers face, definitions of industry jargon, and information on rebates, verification and plan services. More information about the tool is available online at www.truthrx.org.
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The difficulty of navigating employer-PBM contracts is compounded by similarly lopsided contracts between pharmacies and PBMs. Often, pharmacists are contractually forbidden from telling the PBM's clients how much they receive for the same drug. That lack of transparency gives the PBMs increased confidentiality to mark-up employers' prices.
For many PBMs, the more obscurity and confusion in the contract negotiating process the better. The difficult process of ironing out a contract often forces employers to hire benefits consultants and specialists who may not always be working in the best interest of the employer.
Over time, with the increased use of contract negotiating tools and education to plan sponsors, PBMs will be forced to increase transparency, ultimately reducing the cost of prescription drugs for employers and consumers.
Initially, PBMs evolved as means to lower overall drug costs and simplify the prescription services process. But more recently, PBM profits have swelled and it's become harder and harder to see how PBMs are saving anyone money—and just what exactly plan sponsors are paying for. It's time for employers to draw back the curtain and see what the PBMs are hiding.
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