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November 7, 2017

Four Effective Ways to Engage with your Pharmacy Benefit Manager

Artemis Health

You know this already—you need to get a much closer look at trends in your prescription spending. You also know that the only way to do this is through your Pharmacy Benefit Manager (PBM), but it’s not always easy. PBMs aren’t incentivized to provide transparency, offer custom plans, or work collaboratively with employers, brokers or consultants.

We know you won’t let this stop you. Pharmacy claims already account for an estimated 9% of healthcare spending in the U.S., and that number is only predicted to rise. Artemis Health’s mission is to find and address wasteful spending so everyone can access quality, affordable healthcare. We’re sharing our tips and tactics for working effectively alongside PBMs to slow the rising costs of Rx benefits. Let’s take a look.

1. Get access to your data.

Data, data, data. We’re sure you hear this at every benefits conference, in every executive meeting, and in every issue of your favorite industry magazines. That’s because data is the key to making informed decisions to reduce your benefits spending without reducing your coverage.

Some PBMs pass through claims data to the plan sponsor as a matter of course, and some don’t. When it’s time to negotiate a new contract with a PBM for the coming year, your new contract should include all your data and give you the opportunity to look clear at your pharmacy spending. As a recent SHRM blog article advised, “Plan sponsors should start with a contract that has enough transparency so that they can have access to the PBM's data; the contract also should give them comprehensive audit rights over claims and fees.”

It’s an uphill battle, but one you’ve got to fight to keep your high quality benefits at he lowest possible cost to your organization and your members.

2. Customize your formulary.

Formulary management requires vigilance, good claims data and analysis, and a working relationship with your PBM. You need to arm yourself with insights into your Rx spending and take this info to the negotiating table. A transparent PBM will allow you to customize your formulary, make adjustments as needed, and make it easy to track the results.

Artemis’ Chief Clinical Officer Rance Hutchings, Pharm.D., recently wrote a piece for on how to control spikes in Rx spending. In his piece, he suggests asking your PBM, “Can we work together to customize our formulary to suit our needs?” This simple ask has led to hundreds of thousands of dollars of savings for employers—they’ve saved on everything from unnecessary prescriptions for fish oil to improper use of growth hormones as lifestyle drugs.

Some employers choose to work with a consultant or vendor to keep tabs on their formulary and find trends that could help curb wasteful spending. This can help you stay informed in an ever-shifting field that requires true expertise.

3. Ask for rebate sharing.

The immensely lucrative rebates that PBMs receive from pharmaceutical manufacturers is a prickly subject. PBMs say these rebates allow them to lower the cost of pharmacy benefits for plan sponsors and patients. Plan sponsors are increasingly demanding that 100% of these rebates be passed along to them, with the idea that this will also lower costs on essential drugs for patients.

Dr. Robert Goldberg of the Center for Medicine in the Public Interest recently penned an op-ed on PBM rebates for

“These rigged arrangements explain why most PBMs charge patients with cancer, multiple sclerosis, autoimmune diseases, HIV up to 50 percent of the list price of their medicines. Indeed, the sickest 1 percent of patients (about 2.9 million Americans) generate $50 billion in rebates and another $10 billion from paying a chunk of the list price of the drug. Each patient is being overcharged $23,000.”

Essentially, the more the patient needs the treatment, the higher the percentage of the cost they’re asked to pay by PBMs. He wonders how the overall cost of drugs could be impacted if these rebates were discontinued entirely.

Employers must act in the interest of their members by insisting that rebates be passed along to plan payers. Every self-insured employer we’ve spoken to loathes the idea of increasing costs for their employees. They’re equally driven by cost savings AND the need to attract talent through great benefits. This duality makes us confident that employers can and should safeguard Rx rebates to reduce costs for everyone.

4. Include your broker or consultant in the conversation.

As mentioned above, brokers, consultants, and other experts can help self-insured employers find the insights they need to effectively negotiate with PBMs. If you don’t know which prescriptions are disproportionately impacting your spend, or which drugs are attached to a rebate, or how to speak the language of this industry, you’ll find yourself at a disadvantage.

Skilled consultants can conduct audits, determine trends and cost drivers, and prepare data to help you make your case to your PBM. They can also help you understand and negotiate common clauses (and loopholes) in PBM contracts, as detailed in this WorldAtWork piece. A professional advisor will assist with formulary management, plan design, copays and other member fees, and even drug classifications that can impact spend (specialty, generic, brand, and more).

While Artemis Health does have pharmacy experts on staff, our focus is on arming employers and their consultants with great data tools. We work side-by-side with customers and their advisors to give them the leg-up they need in eliminating wasted spending.

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