While the heads of the U.S. Department of Health and Human Services and the Food and Drug Administration have recently turned their attention to pharmacy benefit managers (PBMs) and the impact of rebates on consumers, employers haven’t been sitting idly by. Employers like Praxair, the largest industrial gases company in North and South America, and others who utilize PBMs are beginning to take a more active role in how they contract for and manage their pharmacy benefits.
During a webinar hosted by the Integrated Benefits Institute on March 5, Chuck Reynolds, consultant for Benfield, a Division of Gallagher Benefit Services, and Kristen Putnam, Director, Global Benefits, for Praxair, discussed the challenges facing employers in working with their PBMs and what steps employers can take to better manage those relationships.
Reynolds noted that a disconnect exists between the important role employers believe their PBMs play in helping manage prescription drug benefits and employers’ perceptions of the overall value they are receiving from their PBMs. According to a survey of large employers conducted on behalf of the National Pharmaceutical Council (NPC) by Benfield-Gallagher, this disconnect is rooted in employer concerns about transparency, contract complexity, rebates and focus on value.
The survey found that employers value the services their PBMs provide, but employers share concerns about PBM vendor alignment with their own goals, as well as trustworthiness and satisfaction. Part of the challenge is that many employers lack internal expertise and resources to manage their prescription benefits, so they must rely on their consultants for recommendations, Reynolds said.
Putnam agreed, and explained how she worked to make changes in Praxair’s relationship with its PBM.
“Before 2015, we found an effective way to work with our PBM, but it was time-intensive to manage,” she said. It required a lot of resources to manage the data, customize the formulary and carefully negotiate the contract. Doing so yielded results and savings for Praxair, but Putnam felt there was more the organization could do, and for that, it would need a different sort of partnership, she noted.
Once Putnam determined that Praxair needed to make changes, she said the company sought out a PBM that was fully transparent, meaning that:
- it had pass-through savings: Praxair would pay what the PBM paid for drugs,
- the incentives would align to Praxair’s needs as the PBM worked transparently for it,
- The formulary fit Praxair’s philosophy and the company felt assured that its new PBM would manage benefits in line with that philosophy going forward,
- the PBM would always be willing to work with Praxair to adopt formulary and clinical edits, and
- the data would be easy to access and 100 percent transparent.
“We didn’t understand how much better the results would be or we would’ve moved much sooner. There’s so much unnecessary spending in a traditional PBM. We finally have a PBM with both clinical and cost effectiveness in mind,” said Putnam.
She added, “The main reason Praxair is where we are today is because we had the data, and we were relentless questioners. If we didn’t keep questioning, we would be in the same boat as most employers. It just caused us to do more reading and research and keep looking at our data.”
Putnam offered core advice for other employers looking to better manage their pharmacy benefits:
- Get information: Educate yourself about pharmacy benefit management trends and PBMs’ business models.
- Ask questions: Talk to your PBM and hold it accountable for a response.
- Break up with rebates: Don’t be afraid of losing rebates. It is typically much more financially advantageous to have participants on a lower-cost drug than to worry about rebates.
- Don’t go it alone: Seek out good advice and invest in finding a partner consultant.
- Look beyond the usual: Consider smaller, genuinely transparent PBMs that offer flexibility and the ability to customize all aspects of your plan.
- Be confident: Managing pharmacy benefits isn’t as hard as it may seem, but you need to get and stay involved if you aren’t 100 percent comfortable with your PBM.
Employers can make changes by following some of Praxair’s examples, as well as by using tools to assist employers with the PBM assessment process developed by Benfield-Gallagher as part of the project funded by the NPC. Available on NPC’s website, these tools include:
- the PBM Relationship Segmentation tool, which provides employers with the ability to quickly assess where they stand with their PBM on satisfaction and trust vs. engagement; and
- the Improving Prescription Drug Benefit Support tool, which helps employers assess the value they are receiving from their consultants and how engaged an organization is with its consultants.