Reverse Your Rx Drug Trends
Prescription Drug Costs Are Like A Runaway Train. From 2001 to 2003, prescription drug costs increased, respectively, 17.8%, 16.9%, and 16.1%. Increases were similar in recent years, and are projected to be still higher in coming years.
Here Are A Few “Starter” Ideas For Reversing This Run-Away Trend. Contact Pharmacy Benefit Consultants, and We’ll Provide You With Still More:
Renegotiate Your PBM Contract: Most PBM/Client contracts enable PBMs to retain virtually all “profit spreads” rather than passing through savings to clients. Thus, the AWP Definition in PBM/Client contracts enables PBMs (and retail pharmacies) to retain all “bulk purchase savings”. MAC Definitions allow PBMs to charge essentially whatever they want for generic drugs! And PBMs keep virtually all manufacturer payments and discounts through a host of boilerplate terms PBMs include in clients’ contracts.
Accordingly, the “key” to reversing your ever-increasing drug costs is to amend your current contract, or draft and execute an entirely new contract. Pharmacy Benefit Consultants - in contrast to other consulting firms - will provide your firm with a lawyer knowledgeable about contracts and all PBM contracting “games” to enable you - not your PBM - to benefit from numerous available savings.
Conduct A Sophisticated “RFP” (”Request for Proposal”): Most RFPs prove to be of little or no value. Purportedly sophisticated consultants “re-price” their client’s claims tapes to analyze the financial savings that might result from using each competing PBM’s purported pricing; However, the “winning” PBM almost never provides in an executed contract the pricing that the consultant analyzed. Similarly, competing PBMs make oral and written promises to “win” consultants’ RFPs, but the winning PBM’s promises are almost never reflected in final contract terms.Pharmacy Benefit Consultants conducts its RFPs differently. PBC requires competing PBMs to agree to specified prices and specified contract terms, in writing, in a binding, executed contract, before a PBM “finalist” is selected. PBC also has never - and will never - accept any money from PBMs, and we’ll execute a written disclosure form to prove it! (Will your consulting firm do the same?)Make sure your PBM RFP is successful, by contacting Pharmacy Benefit Consultants.
Restructure Your Formulary: Change your Formulary from an “Open” 2-Tier Formulary, to an “Incentive” 3-Tier or 4-Tier Formulary, or to a “Closed” Formulary. Simultaneously, assess whether your PBM is favoring lower-cost drugs on your new Formulary - because you can’t assume it is doing so! Unbeknownst to most PBM clients, many PBMs favor higher-cost drugs on their tiered Formularies in exchange for secret manufacturer payments that PBMs fail to pass-through to their clients. Accordingly, you must review each therapeutic category (cholesterol reducing drugs, diabetes drugs, etc.), and determine the least-costly drugs in that therapeutic category. To do so, analyze each drug’s “net cost”, based on each drug’s AWP and the pass-through manufacturer payments for that drug. Thereafter, structure your formulary “tiers” to favor the drugs in each therapeutic category with the lowest “net cost.” Retain PBC, and PBC can help you accomplish this complex task.
Restructure Your PBM’s Drug-Switching Programs: PBMs implement “Drug Switching Programs” - also called “Formulary Compliance Programs” - purportedly on behalf of their clients. However, PBMs never tell their clients that many PBM drug switches are from low-to-high cost drugs. Accordingly, you must contractually require your PBM to implement only high-to-low cost switches. Also, you must require your PBM to provide you with “net cost” information for each drug from and to which it is switching, so you can ensure that all switches are high-to-low cost. Also, you must require your PBM to guarantee that it will not increase the price of the switched prescription when the prescription is refilled or renewed. Finally, you must include language in your PBM contract that requires the PBM to satisfy all of the above requirements on a continuing basis.
Require “Pass-Through Pricing”: PBMs frequently reimburse retail pharmacies for dispensing drugs to your plan members using one price, but invoice your company for the same drugs using an entirely different and higher price. Similarly, PBMs purchase drugs for their mail pharmacies and specialty drug pharmacies at one price, but invoice you for the same drugs at far higher prices. Eliminate all contract language that allows such practices, and draft contract language that explicitly requires retail, mail and specialty drug “pass-through pricing.”
Require “Pass-Through” Of All Manufacturer Payments and Discounts: Federal and state litigation - as well as numerous lawsuits filed on behalf of individual companies - allege that many PBMs are wrongfully manipulating their contracts with manufacturers to deprive PBM clients of savings. To recover hundreds of thousands of dollars - or millions of dollars - clients should institute litigation. To ensure that all savings from manufacturer payments are passed through in the future, clients should immediately require that PBMs amend their contracts, or negotiate new contracts: PBMs should be contractually obligated to (a) provide full disclosure of all contracts with all manufacturers and third parties; and (b) pass-through all payments and discounts obtained from all manufacturers and third parties. When Pharmacy Benefit Consultants conducts PBM RFPs - and/or drafts and negotiates new PBM contracts - for our clients, we ensure that PBMs pass-through to our clients ALL FINANCIAL BENEFITS, in their entirety, from ALL third parties, including drug manufacturers and wholesalers and repackagers. Retain PBC and it will help you accomplish the same goal.
Contact Pharmacy Benefit Consultants — Implement All Of The Above Cost-Saving Strategies And Learn About Still More.