Common PBM Cost Tactics

May 2024
Understanding pharmacy program costs:

Amidst the myriad of articles exposing the questionable practices of PBMs, the urgency to address these issues intensifies. These practices not only inflate medication costs for patients but also jeopardize the integrity of the US healthcare system. Yet, one critical aspect often overlooked is the profound impact on members’ health.

When PBM’s create formularies, the original idea was to build these formularies to ensure that the safest, most efficacious, and cost-efficient drugs were preferred. As we all know, PBM’s “prefer” certain drugs by offering lower prices. Tier 1 drugs are generics, and tier 2 are preferred brands. Tier 3 is usually reserved for non-preferred, brand drugs; and sometimes there is a 4th tier for specialty products. The member’s copay usually increases with each tier.

Unfortunately, many PBM’s have strayed from this original model. The brand drugs that they “prefer” are usually those that provide the most financial benefit to the PBM, usually through rebates. And most PBM’s also offer “closed” formularies that are supposed to deliver an even greater level of savings to their clients by excluding coverage of certain, branded drugs.

Prior Authorization and Step Therapy programs are other ways that PBM’s encourage members to use the pharmaceuticals that provide the most benefit to the PBM. While these programs are supposed to encourage members (and their doctors) to try lower cost, first line therapies before prescribing higher cost drugs; today these programs are used to encourage the use of high-cost pharmaceuticals that provide the highest levels of rebates to the PBM. Patient outcomes are secondary considerations, at best.

Crystal Clear Rx understands that while pricing is a primary concern, and critical to managing overall pharmacy program costs; other factors such as Drug Mix are also a VERY important factor in managing overall costs. Simply getting the biggest discount isn’t enough. We must review and analyze all PBM practices, including formularies, Prior Authorization, Step Therapy, and other factors in order to get the best possible health outcomes for members at the lowest possible cost.

If you have Rx Benefit question(s) please reach a CCRx Consultant.

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