Expect More From... PBM RFP Process!

How valuable do you think your Pharmacy Benefit Manager (PBM) contract is?  Sure, you have been reassured by your consultant that the discount and rebate guarantees are the best they have seen for a group your size.  Also, the terms seem to be rock solid, and you will be able to hold your PBM accountable, when you go into an audit.  The real question is: how many of these contracts guarantee that the PBM will manage your costs or act in your best interest? In my experience, very few.

With pharmacy costs rising, why do we continue to worry about network discounts and rebate guarantees?  Of course, the PBM can offer a very lucrative rebate guarantee if they are dispensing high-cost brand and specialty drugs.  What value is an extra percent on a network discount on a high-cost drug when a lower cost drug is available?  I would rather have a 10% discount on a $10 drug than a 25% discount on a $150 drug that is equally effective.  Negotiating an extra percent or two on a network guarantee doesn’t move the needle and pushing for higher rebate guarantees encourages PBMs to cover drugs that offer a high rebate.  It reminds me of a conversation I had with a trustee with the International Brotherhood of Teamsters.  He said “Christine, if I understand you correctly, the only way we can save money is to spend a lot of money.” Essentially, that is true, if you are focusing on the rebate performance of your PBM.

In my opinion, the way that the pharmacy consulting industry has structured the PBM Request for Proposal (RFP) process focuses on the wrong metrics.  The old adage “you get what you manage.”  If we are only evaluating PBMs on the network discounts they are offering or the rebate payments they can provide, we are incentivizing the PBMs to focus on these areas.  The holy grail of pharmacy benefit management is lowering or at least controlling the Net Cost per Member per Month, inclusive of fees and net of rebates. 

If PBMs are truly “benefit managers”, they do more than negotiate with pharmacies and manufacturers.  They have tactics that truly move the needle.  Kelly and I have been undergoing a really interesting project.  We have been working on a project that we are calling a “PBM assessment.”  Our goal is to understand what innovative PBMs are doing to manage their client’s costs, while improving patient care.  We have seen some extraordinary solutions that provide measurable objective outcomes. If you hear the only way to evaluate, monitor and receive guarantees is through rebates and discounts, think again. Trust yourself, how has this system worked for you thus far? Where do you want to go?   This initiative has really helped me regain hope in the industry.  There is a new set of metrics that should be included in your decision making, monitoring and performance guarantees. There are PBMs out there that are doing the right thing, and we have a responsibility to evaluate these PBMs on the value they bring. Plan sponsors have a fiduciary obligation to partner with PBMs willing to actually manage care and costs. Therefore, Foundational Pharmacy Strategies is committed to changing the PBM RFP process and providing a mechanism for PBMs to be encouraged to innovate.  We think innovation is the key to lowering pharmacy costs and increasing access. 

We need to expect more from the PBM evaluation process and push our PBM partners to actually manage costs.