Breaking the pharmacy status quo: A different way to look at PBMs
The industry is reaching a tipping point where an increasingly loud chorus of voices are demanding transparency and a focus on health strategy.
Typical PBMs have a backwards view of the pharmacy benefit management process, making formulary decisions based on price and rebates, rather than what is best for the patients. In fact, pharmacy benefits managers have become pharmacy profit managers. The entire pharmaceutical ecosystem is fractured, with hidden fees baked into contracts and employees treated like problems to be managed.
If the contract you’re reading doesn’t include the sentence, “We will charge what we pay the pharmacy,” employers can fall victim to spread pricing, hidden rebate fees and high-cost formularies.
The fact is, transparently prioritizing health over profits pays dividends for both brokers and their clients. When brokers bring price transparency to the table, employers respond positively. Instead of complicated RFPs, long contracts (100 pages or more!) and manipulative, hidden pricing, employers receive simple contracts that affirm they will be charged only what the pharmacy is paid as well as benefiting from cost savings and personal customer service.
Not only is transparency in pharmacy benefits management better for business, it is becoming increasingly important as more employers, employees and lawmakers are focusing on the pharmacy benefits management industry and demanding answers. The Pharmacy Benefit Manager Transparency Act of 2023 was a first step, but will certainly not be the last word when it comes to legal and governmental oversight and accountability.
The industry is reaching a tipping point where an increasingly loud chorus of voices are demanding transparency and a focus on health strategy. One of the core issues driving this focus? High prices for specialty drugs.
For example, employees end up paying for these drugs out-of-pocket at a cost of $15,000 a year or more. If their plan deductible is $5,000, that means the employee is responsible for $10,000 a year for those specialty drugs and many aren’t able to plan for that as part of their household budget. In that same scenario, employers have to pick up the rest of the costs of those specialty drugs, which can prove catastrophic. Case in point: Some employers have plans with a copay only and end up having to pick up much of the cost of those specialty drugs, some of which cost $1 million dollars or more, which can lead to bankruptcy for that employer.
Using cost savings outlets such as transparent, low-cost pharmacies like Mark Cuban’s Cost Plus Drug Company, giving employees more options, and empowering them to compare pricing and simply charging what the pharmacy is paid, are all ways in which the cost of medications can be controlled. But those only exist with transparency at the core.
You may be thinking, “Why change? This system has worked for us for years.” The answer is that employers are hungry for change and increasingly refuse to be served through the same old opaquely repackaged options. More and more, employers are seeking consultants and brokers who bring transparency and health strategy to the table. These advisors are taking control and doing the leg work themselves by:
- Viewing employees as patients, rather than numbers or “profit centers.”
- Focusing on patient care and the full patient experience with quick turnaround times and caring customer service.
- Ensuring simple, easy-to-understand contracts without spread pricing, hidden rebate fees or high-cost formularies.
A focus on transparency and health strategy isn’t just the right thing to do, it’s rapidly becoming the only way to succeed in this industry. Get ahead of the curve before employer demand for clarity becomes undeniable and you’re stuck at the back of the pack.
Mark Williams is owner and chief executive officer of True Rx Health Strategists cultivating integrity, innovation and healthcare to transcend pharmacy benefit solutions for employers and patients.