A recent study found that employers would prefer that PBMs are more transparent with their pricing and would like them to focus less on rebates and value-based designs, comes as PBMs are under increased scrutiny for their opaque pricing practices.
The survey of 88 very large employers, “Toward Better Value: Employer Perspectives on What’s Wrong with the Management of Prescription Drug Benefits and How to Fix It,” was conducted by Benfield and commission by the National Pharmaceutical Council.
The findings drive home some of the common complaints about PBMs:
Poor transparency – Employers said that current pharmacy benefit management models lack transparency:
- 30% said they understand the details of their PBM contracts.
- 40% said they fully understand their PBMs’ performance guarantees.
- 63% said PBMs are not transparent about how they make money.
Complex contracts – Nearly three in five employers surveyed said PBM contracts are overly complicated, ambiguously worded, and often benefit the PBM at the expense of the employer. Tops on employer’s wish list: clearer definitions and simpler contracts.
Focusing less on rebates – Seventy percent of employers said they thought PBMs should offer other ways besides rebates to reduce prices.
Employers also said rebates detract their attention from more important factors, like reducing employee coinsurance or deductibles or getting better access to the most effective pharmaceuticals.
Two suggestions they had: Discounts or point-of-sale rebates, in which patient payments reflect a post-rebate price.
Getting value for employees – Employers want to understand the thought process when PBMs create formularies and exclusionary list decisions, such as the clinical, financial and economic impacts.
Employers had these two suggestions:
- Using value-based insurance design, where high-value drugs cost patients less than low-value drugs.
- Setting payments based on the effectiveness of a drug.
For more information, please contact a UBF consultant.
Allan Phillips is a Managing Principal at UBF and has over 25 years experience as a senior health care and pension consultant. He has worked with Fortune 50, 500 and mid-size companies to assess, develop, and implement integrated benefits programs for global organizations.