Many patients face a monthly reminder of high prescription drug costs with every refill. Others are shocked when they go to fill a new prescription. What nearly everyone understands is that prescriptions can be remarkably expensive. Is there anything employers can do to help lower costs?
One of the most effective solutions for finding the lowest potential drug cost is using a pharmacy benefits manager or PBM. It’s a frequent recommendation that MJ makes to its clients, but it comes with one important caveat—you need a PBM that has a transparent pricing model. Here’s why:
- A PBM contracts with pharmacies and is supposed to negotiate discounts and rebates with manufacturers.
- In theory, these savings are then supposed to be passed onto to the insurance companies and employers to reduce overall healthcare costs and should also lead to lower prescription prices for consumers.
- Manufacturers are willing to offer these rebates to gain a spot on a PBM’s approved list of drugs, known as a “formulary.”
Without transparent pricing, which isn’t required by law, there is no way to gauge if any savings are actually being passed along. In a current lawsuit filed by the country’s second largest health insurer, Anthem Inc., against one of the largest PBMs, Express Scripts, the rebate model is being called into question, and Anthem is challenging the amount of savings that Express Scripts is keeping for itself. As Rena Conti, an expert in health care and pharmaceutical financing at University of Chicago Medicine, explains, “PBMs drive clear and significant value in this market. At the same time, and here’s the trade-off, they don’t do it for free. They are companies that have shareholders and that also have to meet profitability targets. And some of the significant value that they provide the system is captured by them and not by payers and patients.”
So ultimately, what you need to do is remain a savvy consumer—and MJ is here to help. Not only will we continue monitoring the Express Scripts case and any market impact that results, we can also review any of your existing prescription policies (with or without a PBM) and provide a recommendation for any potential savings.
If you’d like to learn more about the rising cost of prescription drugs, join us at this week’s HR Summit in Phoenix where we will be presenting on ‘Methods to Minimize the Rising Cost of Prescription Drugs.’ Or stay tuned to MJ Insight where we will be providing additional content on this subject in the weeks to come!