Why the Right PBM is Key for Keeping Member Drug Prices Low

With healthcare costs continuing to rise each year, employers must carefully manage their health benefit plans, especially when it comes to pharmacy benefits. A recent lawsuit involving Wells Fargo highlights the possible consequences of failing to protect members from overpaying for medications—and seeing increased premiums as a result. 

At the heart of controlling drug costs is the relationship between employers and pharmacy benefits managers (PBMs). Selecting the right PBM can make a significant difference in keeping costs down for members, while also ensuring that members receive the care they need at a fair price. As you know, managing drug prices is vital for employers, and finding the right PBM can safeguard both the company's bottom line and the well-being of members.


 

The Role of PBMs in Drug Pricing

Pharmacy benefits managers (PBMs) are essential players in the healthcare system, responsible for negotiating drug prices with manufacturers, setting up formularies (lists of covered drugs), and processing prescription drug claims. For employers, the choice of a PBM can make or break the affordability of prescription drugs. PBMs can either help employers save on drug costs through effective negotiations and transparent pricing, or they can do the opposite—resulting in higher costs for both the employer and their members.

How to Choose the Right PBM

Employers should approach the selection of a PBM with caution and diligence, focusing on the following key factors:

1. Transparency: Look for a PBM that is transparent about its pricing, fees, and relationships with drug manufacturers. A lack of transparency is often where conflicts of interest and hidden markups arise, driving up costs unnecessarily.
2. Cost-Management Strategies: The right PBM will actively work to keep costs down through strategic negotiations with drug manufacturers, offering rebates where possible, and implementing cost-saving measures such as tiered formularies or generic substitution policies.
3. Customization: Employers should seek out PBMs that offer plans tailored to their specific member base. A one-size-fits-all approach can often lead to higher costs and less satisfaction among members who may need access to specific medications at an affordable price.
4. Ongoing Oversight: The relationship with a PBM shouldn’t end once a contract is signed. Employers need to consistently monitor their PBM’s performance and ensure that they are living up to their promises. This means analyzing pricing data, seeking feedback from members, and working with an independent advisor if necessary to audit drug costs.

Employers' Fiduciary Duty

Employers have a fiduciary responsibility to act in the best interest of their members when managing health benefit plans. This includes ensuring that prescription drug costs remain as low as possible while maintaining access to necessary medications. 

By choosing the right PBM and maintaining active oversight of their health benefit plan, employers can help keep drug prices under control, honor their responsibility to their members, and avoid the costly consequences of mismanagement.

Keeping Drug Prices Low is Non-Negotiable

As health care costs continue to rise, employers must take a proactive approach to managing prescription drug prices. Finding the right PBM is a critical step in this process. By focusing on transparency, cost-saving strategies, and active oversight, employers can ensure that their members receive the medications they need without paying more than necessary. For more information about PBMs, why they matter to employers, and what to look for when choosing one, please check out our recent white paper, "Understanding Phamarcy Benefit Managers," or connect with us through the form below.