4 demands to make in your next PBM contract
Pharmacy benefits contracts are complicated. But plan sponsors have the power to control the contract conversation. Here's how.
By: Prescryptive Health
By design, pharmacy benefit (PBM) contracts can be daunting. But plan sponsors have more power to control the conversation than they might realize. By reading the fine print and knowing your rights, you’ll have more pull at the negotiating table.
Here are four key demands you should make in your next PBM contract:
1. Push for transparent pricing
PBMs use a proprietary pricing list called a MAC. To push for even more transparency, consider requiring the use of NADAC pricing. NADAC is a price list for generics published by CMS. Using NADAC pricing offers you an independent third-party pricing source while allowing for fair pricing for pharmacies. What’s more, it delivers competitive pricing and a source to verify the prices the PBM charges you for generic drugs (which is where many PBMs make the most money).
2. Require rebate pass-through.
Make it clear that rebates are your property. The contract language should state the PBM must pass through rebates rather than retain them. Be sure to define the term “rebate” to include any payment the PBM receives from drug manufacturers based on your plan’s utilization. Otherwise, a PBM might be tempted to call a specific revenue stream something other than a rebate so it can retain that money and still be compliant with your contract.
3. Command clarity on drug definitions
Prohibit the PBM from using a “proprietary” algorithm that determines whether a drug will be priced as a brand or generic drug. Include definitions that refer to the Medi-Span MONY codes or the First Data Bank equivalent that can be verified during your PBM audit.
4. Own your data
Owning your data has never been more important. The business and health insights your data provides can lead to cost savings, utilization improvements, a better benefits plan, and an enhanced employee experience. When you own it, there’s no tracking down data just to ask a third-party to audit it. The results: A much smoother audit process and better cost outcomes. So, make it clear in your contract that you own the claims data and that your PBM must produce it upon demand at no cost to you. Because why pay extra for what should already be yours?
Looking for more ways to save on your plan? See 3 questions to ask to reduce plan costs.