How satisfied are you with your PBM?
December 15, 2008 by Bill MeltzerPosted in: In this week's e-newsletter, Latest News & Views, Vendor management
Mark Twain once said there are lies, damned lies and statistics.
On a scale of one to 10, the average U.S. employer rates its pharmacy benefits manager (PBM) a 7.8, according to a study of 540 firms by the Pharmacy Benefit Manager Institute (PBMI).
While many What’s New in Benefits & Compensation and HRBenefitsalert.com readers we know are less than thrilled with the PBM industry, the PBMI study offers valuable insights into the issues your peers care about. Far and away, employers’ biggest concern is transparency of drug costs.
Survey respondents said they want to know if they are really getting the best deal on prescription drugs. Twenty-eight percent of respondents said their PBMs made their drug costs “completely transparent” (but that also means 72% see room for improvement). Other key issues:
- two-way communication. Employers want PBMs to make an effort to understand their clients’ needs as individual organizations, and
- administrative services. PBM involvement in drug benefit management varies greatly and employers want to see measurable quality standards.
November 28th, 2008 at 12:52 pm
Those who responded that PBMs offer complete transparency may be uninformed. It is imperative that HR executives within your company do some research in this area that could save your company thousands to hundreds of thousands of dollars, depending upon your size.
HR executives should REQUIRE that PBMs supply their employees with a “prescription log” of any and all prescriptions should your company request it. Prescription logs will show the exact amount of money paid to the pharmacy for each prescription filled. If the insurance company, or the PBM state that this cannot be done, a warning bell should start to go off.
The HR dept should take a random sample of employees and request that those employees then obtain a copy of their prescription logs from the PBM/insurance company and their pharmacy(ies) and compare what was paid to the pharmacy versus what the PBM claims was paid to the pharmacy. I guarantee it will be an eye-opening experience for both HR and employees alike. A well-published study done by Creighton University cited many examples of PBM rip-offs such as paying the pharmacy $30 for generic Zantac (Ranitidine) and charging the insurance/payor $80 for that same prescription. Cost savings? Not when PBMs calculate payment from AWP (average wholesale price). By hiding under the guise of AWP, PBM create a tremendous amount of leverage for themselves by slashing pharmacy reimbursement, overcharging payors and pocketing billions of dollars in profit for themselves.
And, how about those rebates? Don’t know about rebates? Well look no further than your PBMs formulary. If a brand-name drug is “non-formulary” it means that the PBM is not receiving a rebate from the manufacturer on that drug, so it has no vested interested in your physician writing for it, or the pharmacy dispensing it, even IF your physician has tried every “formulary” drug on their list specified for your specific condition. Have you had a prescription filled several times and then been told by your pharmacist that the drug is no longer “formulary” or not covered at all (in which case the PBM offers a ‘discount rate’ by slashing pharmacy reimbursement to 7-12% over pharmacy cost)? You can rest assured that the manufacturer is no longer offering the PBM a rebate on your medication, and it doesn’t matter if its in the middle of your plan year, or you need the medication because its the only one that controls your blood pressure. Therein lies the tragedy of the rebate trail.
Ever wonder why it takes soooooo long to get a prescription filled nowadays? As a 30-year veteran of the retail pharmacy wars, I’ll tell you. Suppose as in the example cited above that your PBM won’t pay for your blood-pressure medication anymore (oh, and by the way, we are not allowed to tell you that they don’t pay in such verbage, we must say “the drug is not covered under your plan”). A message come back to the pharmacist stating that your medication is “non-formulary” and to contact your physicain to try X, Y or Z brand. We must now call your physician to get authorization to switch your medication, and 9 times out of 10, we have to wait for your physician to call us back. When your physician finally calls back an hour to 24 hours later, he prescribes brand Z, but wants you to take 1 tablet and 1/2 daily and orders 45 pills. We then transcribe the prescription (write it from telephone orders) and process it through your PBM, but now it rejects because they will only cover 30 tablets at a time, and 45 tablets is over limit. Well, here we go again… Now, multiply this scenario by several hundred prescription per day and it should become overwhelmingly clear as to why it takes such an inordinate amount of time to “just put pills in a bottle,” as we so often hear.
PBMs make billions of dollars in profit, raise the cost of prescription medication due to the millions of dollars of rebates they collect from each manufacturer in order to put their drugs on the “formulary list”, rip-off the insurance company/ payor by inflating amount actually paid to pharmacies, and cost the patient, doctor, and pharmacist lots of wasted time. Speaking of time, perhaps it is time we start asking what PBMs are actually good for, or better yet, what we need them for anyway. Fee for service anyone?
December 19th, 2008 at 10:33 am
Thanks for the informative comment, Mary Jasinski Caldwell. I appreciate the insider’s view! I have long felt that PBM’s were ripping us off, but I wasn’t sure just how they were doing it. You have helped me to better understand the problem.
One thing I discovered is that, in some cases, if the drug is non-formulary, resulting in a higher co-pay to the employee, some of the drug companies actually offer rebates directly to the pharmacy through a rebate program the employee can subscribe to. These rebates actually apply to the employee’s co-pay, reducing their out-of-pocket expense. This isn’t always available, but it is worth checking out. In my case, my co-pay for Nexium, a non-formulary drug per our PBM, was reduced from $50 per month to $20 per month through their “purple pill program.”
March 4th, 2009 at 10:41 am
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