Thursday, March 31, 2016

Understanding the Fine Print in PBM Proposals and Agreements

Intelligent Solutions in Pharmacy Benefits
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By now it is common knowledge that drug prices are rising in nearly every category. In 2015, branded drug costs increased by 14.77%, specialty drug costs increased by 9.21%, and generic drug costs increased by 2.93% when compared to the previous year (as reported by Employee Benefit News). With that said, many have looked to try and control these costs, and earlier this month, Express Scripts, a PBM, announced that they are working to develop more strategies that result in employers being able to offer drug benefits in a more affordable way.

Specialty drugs, drugs that are used to treat more complex disease states such as cancer, are said to have an extremely high inflation rate - about 10% - 20% each year. With this in mind, Express Scripts developed what they refer to as their Inflation Protection Program. As of January 1, 2016, Express Scripts is now offering a program, which sounds too good to be true, to “shield participating plans from the full cost impact of year-over-year price increases on brand drugs.” This program only addresses high cost “brand” drugs for which PBMs negotiate significant rebates and for which there are often lower cost “generic” drugs and “over the counter” alternatives. However, it is in the fine print where the unveiling of the ambiguity lies.

Too good to be true?

To employers who offer pharmacy benefits to their employees or members, knowing that Express Scripts is willing to cover the cost of services when inflation goes above an agreed upon threshold can result in a heavy sigh of relief. However, it is “understanding” the fine print, not only in the proposal, but more importantly in its entirely in the actual PBM Agreement. For example, how is your plan’s inflation cap determined and what must YOU do in order to ensure that Express Scripts will continue to uphold their side of the deal?

If something sounds too good to be true, listen to your gut. This is why you need to work with PBIRx, which is independent of the PBM. That means we always put our clients’ best interests first and not the PBM’s profitability. As a pharmacy benefit auditing and consulting firm for over 25 years, PBIRx is a master and expert at understanding, interpreting and negotiating PBM Agreements and adjunct agreed upon calculation methodology language so that our clients come out the winner. Together we challenge PBM Agreement language that sounds too good to be true!

For more information about our pharmacy benefit consulting and auditing services, please visit or call (888) 797-2479 today.

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