In 1997, Richard Carlson wrote a great book titled “Don’t Sweat The Small Stuff." Although I agree totally with the premise of that book in the general context of our daily lives, it may not be a good strategy when it comes to pharmacy benefits. Over the next few BLOG posts we will discuss some of these.
Let’s think about it. The news now is all about expensive “Specialty” drugs such as Sovaldi. At $ 84,000 for a course of Sovaldi therapy it certainly is a concern. But there are so many other examples of “small stuff” in the pharmacy benefit that can really add up. For example, Generic drugs. Now Generic drugs can be a great thing for the pharmacy benefit. They can be as much as 80 % less expensive than the equivalent Brand name product. Generics are now commonly as much as 85 to 90 % of all the prescriptions filled for a payer or employer’s pharmacy benefit. Hmmm....... Drugs that can cost up to 80 % less and now make up almost 90 % of the prescriptions filled. That is great, right?
Well, maybe. This can be dependent on the type of PBM contract an employer has. For example, a typical (traditional model) PBM bills an employer client one price for a Generic prescription and pays another (lower) price to the dispensing pharmacy. This “mark up” of a prescription claim can mean that the price billed to the employer is more than uninsured people pay “cash” for the same prescription at the same pharmacy. (Click here to see a real world example.) Apply this to all of those Generic prescriptions and the employer could be paying significantly more for Generic prescriptions than they should be.
So how can an employer find ways to pay less for their employees Rx benefit?
1) Consider changing to a PBM contract that bills you the same amount the PBM pays a pharmacy. This is referred to as a "Pass-Thru" PBM contract. PBMs offering this type of contract must charge an administrative fee to make money, but in many instances the administrative fee charged is less than the “markup” previously described. Learn about “Pass Thru PBMs.”