A Monthly Blog Series - #5 of 5
So far, in my series “Weathering the Rx Storm,” I’ve reviewed how to improve your PBM contract, how to develop a strong formulary & effectively manage benefits design and how to engage employees in new models. If you haven’t been following my series, then I recommend reading the first four blogs for a well-rounded look at saving money on pharmacy benefits.
Today, in the final blog of this series, I’ll focus on the advantages of carving out mail order pharmacy, specialty pharmacy and rebates and the immense amount of savings available in these areas.
The first thing you must do is set up a good contract with your PBM. There must be language that ensures you’ll have the ability to carve out these services at a future date at your discretion with reasonable notice.
Carving Out Mail Order. PBMs say mail order pharmacy is more convenient and cheaper for your company. However, that may or may not be true. We’ve found that in many cases, Mail Order is actually more expensive. For one reason, unless you’re receiving two and a half times the retail copay, the higher discount offered may not offset the loss of copays. It may be less expensive for the employee, but more expensive for the employer. Often times, PBM’s own the mail facility that they will be promoting to your membership and often times, this mail facility will be considered just like any other pharmacy within their network. This allows a PBM to determine their own margins on drugs that are dispensed at mail.
One way to remedy this is to ensure there is language in your PBM contract that allows you carve out your prescriptions to an independent mail order company whose goals are more aligned with your own.
Another way to lower costs is to adjust your copays so you’re not losing money through mail order. Remember, you’ll likely have to charge two and a half times the regular copay to make up for losses.
And lastly, you can move away from mail order altogether by utilizing a retail network that’s more cost effective. I recommend taking advantage of well designed 90-day at retail options that are offered through retail.
Saving Money on Specialty Rx: The rising costs of Specialty Rx is a huge area of concern for employers. Recently, there have been shocking predictions that specialty Rx will be 50% of the pharmacy spend by 2018. One of the causes behind the increase is some revolutionary therapies for diseases like Hepatitis C or Rheumatoid Arthritis. Another driver of costs is direct to consumer advertising for specialty medications. Often times, the medications being advertised have a brand or generic alternative which is much less expensive and often times is just as effective.
There are many ways to lower costs on Specialty. Carving out to best in breed specialty pharmacies encourages the provider of specialty services to compete for your business. This results in getting a better deal than you would have going through a PBM. I recommend getting a pricing sheet that details out discounts for each drug from any specialty facilities you’re able to contract with.
Having an independent review of your current spend done by neutral specialty pharmacy experts is the best way to get the most savings. This is one of the many areas in which my team at Crystal Clear Rx finds significant savings for our clients.
Be careful and look beyond the Rebate Game. Rebates sound good, but in reality, you may not be getting the best savings possible through them. Manufacturers issue rebates to PBMs and work out a deal that allows their drug to be placed on Tier 2 of the formulary as a recommended drug. The more exclusions on your formulary, typically the more rebates that can be generated. Your contract should determine these details and tell you if you’re able to share in any or all of those rebates.
Also, make sure you clearly understand what part of the rebate reimbursement you are getting. Just because a PBM says you are getting 100 % of the rebates may not actually mean that.
Just as with Specialty and Mail pharmacy, there is the option of carving out rebates from the PBM altogether through a third party company called a “rebate aggregator.” You can contract with these companies, who will submit all rebates for you and handle all the paperwork on your behalf. Working through these aggregators will ensure you receive 100% of the rebate dollars that are owed to you. Even paying the rebate aggregator a fee still means you may see more of the rebates garnered. The biggest benefit of carving out rebates is that it makes your costs transparent- you know exactly what you’re getting for your spend.
If done correctly, carving out mail order pharmacy, specialty pharmacy and rebates can save your plan significant money.
This concludes my series “Weathering the Rx Storm,” but my door remains open to those who have more questions or need help with their PBM contracts. My team of experts is here to support self-insured employers through the entire process.
Tim Thomas is a Florida Health Care Coalition Affiliate Partner, a pharmacist, and the owner and executive director of Crystal Clear Rx, a group specializing in pharmacy benefits consulting. For more info, visit www.crystalclearrx.com or call 303-955-7827.