prescription drug prices
Employee Benefits

‘I’m not telling you’

Jen Kivlin
Jen Kivlin
Vice President, Employee Benefits Strategic Leadership

At Holmes Murphy, we spend a lot of time talking about pharmacy. In an already-complicated industry, pharmacy is becoming more and more of an issue for everyone. Why is that? Let me give you a few examples of what’s going on.

Note of clarification before I get to my examples. PBM stands for Pharmacy Benefit Manager. This is the middle-man between drug manufacturers and distribution.

OK…on to my examples (and unfortunately, these don’t even scratch of the surface):

  • Transparency. It’s a buzz word and sounds great. The three main PBM players (CVS Health, Express Scripts, and Optum Rx) have more than 75 percent of the market share and are able to receive significant bulk discounts. The small PBMs claim true transparency, but do their contracting practices offset the pricing they can receive? Sometimes it’s hard to tell, especially after my next point.
  • “I’m not telling you.” Yes, it’s happening where some insurance companies refuse to disclose the contract terms with their partner PBM. They’re spending your company’s money but will not provide you the information to see if it’s under competitive terms.
  • Insurance could cost you more. CVS is the latest to be involved in a lawsuit where sometimes a person with insurance is paying MORE than someone without insurance. Fingers are being pointed everywhere, but at the end of the day, it’s your employees who are paying more.
  • The rebate game. You may think you’re getting a great deal when you receive a large rebate check. But did you know a PBM can simply ask the manufacturer to call it something else, like an administrative fee? The manufacturer doesn’t care what they call it, but the PBM definitely cares if the contract only requires passing along the “rebates” to you. Sneaky.
  • Specialty medications. The definition for this can vary, but, in general, think VERY expensive drugs which treat a condition applicable to a small population. As in… potentially hundreds of thousands of dollars for one person. And this will only become a bigger problem for employers since 60 percent of the drugs in the pipeline for approval are specialty.
  • Whose decision should it be? The doctor, the pharmacist, the PBM, the employer? We recently had a company contact us saying they were being advised (by another firm) to exclude specialty medications completely from their group insurance plan. Yes, that would very likely save you money. But they hadn’t thought it through. There are new specialty drugs that can now save the life of someone who a few years ago would have certainly died. Are you ready to take that call as an employer and explain why it’s not covered?

Again, these are just a few of the pharmacy issues causing rapid rate increases, contributing to more large claims, and creating confusion in the market. But Holmes Murphy can help! Our pharmacy experts are focused on trends and solutions for employers to stay ahead of this rapidly changing area of healthcare. Feel free to reach out to us at any time to ask your questions, state your concerns, and get the answers you need!

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