Pharmacy benefit managers and their role in the drug supply chain have been under the microscope, and a new playbook aims to arm employers with strategies to strengthen their negotiating power.
The guide, released by the National Alliance of Healthcare Purchaser Coalitions, identifies several key strategic recommendations that employers can adopt when looking to better navigate their relationship with PBMs. For one, the playbook recommends that employers find advisers that are genuinely putting in the work for them.
Advisers should be independent and transparent, according to the guidebook, and contracts should be designed to ensure that PBMs act in the employer's best interest.
"As we uncover these increasingly apparent anomalies, I think we’ve got to challenge ourselves to do better and most importantly require that our advisers, our middlemen and our intermediaries do better on our behalf," Mike Thompson, CEO of the alliance, told Fierce Healthcare.
The guide digs into the fiduciary's role in managing pharmacy costs and provides insight into what drives high pharmacy costs and where to find the greatest value. It examines flaws in the contracting process and provides employers with practice checklists and sample questionnaires to deploy when pinning down a contract.
The report also includes recommended contracting language that would otherwise require a significant investment from lawyers to discern.
The playbook identifies the top 10 PBM concerns, based on input from an industry advisory committee and purchasers that work with the alliance. These are:
- Promoting drugs with higher prices when lower-price options are available
- Offering preferred coverage to a branded drug when a generic is on the market
- Covering specialty drugs in situations that are not supported by clinical evidence
- Rolling out automated prior authorization, which caused rates to grow by more than 90%
- Labeling generics as branded products or vice versa to manipulate discounts
- Deploying tactics that encourage waste such as early refills or automatic 90-day refills
- Covering high-cost, low-value products such as those with an over-the-counter option
- Replacing rebated drugs with 340B drugs and then failing to pass the 340B savings on to the plan sponsor
- Using a narrow definition of rebates, which allows the PBM to keep 50% or more of the revenue
- Holding plan sponsors "hostage" on contract terms, financial guarantees and provisions
Thompson said the PBM space has become a "rebate-chasing phenomenon."
"It's been easy for employers to go along with the way we've always done things," Thompson said. "I think now it's become readily apparent that all of that has come at a great price."
The playbook recommends that employers establish a "balanced scorecard" on drug costs—for instance, digging into net cost by drug class and waste and appropriateness management. Employers should also ensure they're evaluating members' affordability, adherence, equity and experience.
Employers can and should "own the relationship," according to the playbook. This means taking control of claims data, audit rights, contract development and formulary management.
Thompson said these discussions can be contentious and that being quick to jump to a "the deal's off" mentality hampers progress. Approaching conversations in this way is "not an acceptable way to partner with an intermediary," he said.
"The intermediary should be working for us with those strong clinical and financial advantages to understand the dynamics and then partnering toward solutions that get it right," he said. "I think that's what employers want at the end of the day."