Employers in today’s health care market are faced with the difficult challenge of balancing access to innovative, life-saving, and preventative medicines for consumers, while keeping costs at a sustainable level. 

Over the last 20 years, as these new treatments entered the market, creating a cost and access dilemma, those providing coverage – employers, unions, and government programs – realized the value in hiring pharmacy benefit managers (PBMs) to meet the health needs of their respective enrollees. 

PBMs reduce prescription drug costs by promoting generics, and negotiating with drug manufacturers for rebates and discounts to reduce the net cost of the drug, creating lower-cost pharmacy options. This model has lowered drug costs for employers in the commercial market and is the foundation for the popular and successful Medicare prescription drug benefit. 

Today, specialty drugs are dominating the amount of spending in the pharmacy benefit and payers are demanding PBM contracts that provide cost savings while ensuring these medications are accessible and delivered safely. PBMs commonly provide client guarantees to support accuracy rates through mail-order and specialty pharmacies, which are better than retail pharmacy accuracy rates. This delivery option can improve patient adherence, health, and lower overall costs. 

But for all that PBMs do to reduce costs and improve the quality of pharmacy benefits, it is important to understand that employers, unions and government programs are in the driver’s seat. Ultimately, these payers design benefits, create formularies, decide on the levels of transparency as it pertains to rebates and discounts PBMs negotiate with drug manufacturers, and the amount of rebate dollars they choose to retain. After all, it’s those providing coverage that best understand the unique set of enrollees as well as its own financial picture. 

I know first-hand how the contracting process involves a very rigorous process entailing financial value as well as operational acumen, levels of transparency, audit rights, the ability to provide pharmacy choice and patient satisfaction, capabilities to reduce fraud, waste, and abuse, and improve patient care through mail and specialty pharmacies. 

PBM clients use a “request for proposal” (RFP) process, and often hire expert benefit consultant firms to provide assistance. These benefit consulting companies are nationally prominent entities that utilize high tech resources to evaluate PBM services for clients. This RFP process ensures that each PBM client receives services it uniquely needs and desires. 

The bottom line is that the system is working for employers. A multitude of PBMs are lining up to provide these types of services to clients. In my experience, if the client wants something, it is provided – if not a PBM competitor will step in to provide it, it’s that simple.