Pharmacy claims can be a big part of your spend, perhaps even more so than medical and with over sixty-six percent of adults in America using prescription medication, you need to be sure you’re delivering the most economical pharmacy plan you can.
This means diving into your pharmacy benefits and gathering necessary data such as information about deductibles, premiums, formulary, as well as details about your pharmacy benefit manager.
A pharmacy benefit manager (PBM) manages prescription drug benefits on behalf of health insurers. They negotiate drug costs and can generate profit for themselves or the insurer they work with. They are meant to use the rebates and discounts they negotiate to create better pricing for employees and employers, but sometimes those reductions are absorbed at the source.
For example, a pharmacy benefits manager could pay $20 to fill a prescription then charge the health plan $60, and the insurance company pockets the difference. Because the numbers are not transparent and there are no regulations in place, every large carrier is likely benefiting from these earnings.
Hidden fees can add up.
This is another way insurers can make money through their partnerships, and the actual numbers aren’t always disclosed. On paper, you — the employer, appear to receive a discount on your prescription spend when in fact, no one really knows how much profit is being made.
To see the numbers more clearly, you may need to carve out pharmacy from your current policy.
If your company is large enough, some insurance carriers will allow a self-funded plan to break their bundled package to get a pharmacy carve out. When this is achieved, you access their discounted prescription drug plan and they charge you a network access fee — something like $25.00 per employee.
If you want to continue with this carrier but want to manage the pharmacy through a third party spend they may charge you $45 per employee. Your carrier can charge you more for doing less because you won’t be using their service and therefore they won’t be making the profit they would have if you did.
Basically, your insurer wants you to use their own pharmacy benefit manager, because when you do, they profit.
There is a solution.
By dealing directly with a pharmacy benefits manager you can gain the transparency and control you need to help you and manage prescription drug costs. In one case, we brought in a pharmacy benefits manager that dramatically lowered the costs per medication for the company.
When all of the loopholes for making more profit behind the curtain are taken away, you can get the medicine closer to the actual cost and have access to the right rebates. You are essentially removing the middleman.
You spend less. Your employees spend less.
Large and small groups can benefit from this adjustment. Some employers opt to pass the rebates directly to their employees, reducing the out-of-pocket costs at the point of sale. Some use the rebates to lower overall premiums.
As trusted advisors we can assess your current pharmacy benefits program and help pass those savings to you and your people. If pharmacy is a big part of your spend, and it likely is, you need to know what is going on behind the scenes.
Removing the middleman from the process is a small change that can make a big difference.