Doctor and business man holding up medication concepts Making the effort to understand a PBMpartner's business model is essential because it affects all otherpharmacy benefit decisions available to an employer group. Image:Shutterstock)

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Prior to the COVID-19 pandemic rattling the economy, data fromthe National Pharmaceutical Council showed that 63% ofemployers felt that pharmacy benefit managers (PBMs) are nottransparent. With many companies looking to better manage expensesand ensure affordable access to prescriptions in today's uncertainlandscape, it's more important than ever for benefits professionalsto work with a transparent partner and find ways to reduceprescription drug costs for their employees.

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Although "transparency" is a widely used term across the PBMindustry, varying definitions of this buzzword, as well as hiddencosts and missing data, can skew PBM evaluations and causeemployers to pay too much for their pharmacy benefits.

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Related: Resolving to control drug costs: Your PBM contractreally matters

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So how can benefits professionals effectively manage theirpharmacy benefit costs and ensure they're getting truetransparency? Here are three guiding questions benefitsprofessionals and plan sponsors should ask themselves whenselecting a PBM partner to help improve benefit plan performanceand increase savings:

What type of business model does your company align with?

Making the effort to understand a PBM partner's business modelis essential because it affects all other pharmacy benefitdecisions available to an employer group, such as how much accessto data an employer has or what plan metrics you'd like to meet,including individual discounts or all-in, net-net pharmacy costs.This can have a significant impact on a company's ability to reducedrug spend.

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Two major PBM models are available for consideration:traditional and pass through. A traditional model offers volumediscounts and high rebates to achieve cost savings. This type ofmodel is less transparent about its business practices and requiresstrict adherence to contract details. A pass-through model passes100% of all discounts and rebates back to the plan sponsor, and anadmin fee is its only source of revenue. In this type of model,business practices and fees are fully visible and auditable.

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When deciding on a PBM, consider how much flexibility you wantwith plan design, how hidden income streams may impact what youactually pay, and how much audit accessibility your company wouldbenefit from—each PBM model has fundamental differences on how theyoperate for clients. Benefits professionals need to weigh whichwill best fit their company's philosophy and goals.

What role do you want to play in managing your pharmacybenefit?

Knowing what kind of role you want to play in managing thecompany's pharmacy benefit is critical. Some benefits professionalsprefer to select a partner and let them handle all aspects of theirPBM program, while others want to be involved so they can betterunderstand their pharmacy costs and how it's impacting theiremployees.

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Working with a transparent, pass-through PBM gives you theability to understand your true total costs, monitor performanceand results, and make informed decisions to better manage expenses.Furthermore, a transparent, pass-through PBM partner should allowyou to audit 100% of your claims. Non-transparent PBM providershave full control of your company's claims data, meaning they cancontrol what information you audit, what auditor you use, and evensell your pharmacy data to other companies.

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While most plan sponsors don't take the time to audit their PBM,it's a good idea to have the ability to do so. You should play anactive role in managing the pharmacy benefit so you can view allclaims and data, as true transparency means having open access toall your data and information. Then use that access to data tofine-tune your benefit plan and better manage your pharmacycosts.

Is your company planning to work with a consultant?

Many benefits professionals will choose to work with aconsultant to help them through the complex PBM selection process,yet there may be some behind-the-scenes considerations. Forexample, some consultants may struggle with how to evaluatetraditional models compared to a pass-through model. And some mayhave arrangements with large PBMs that can influence which partnerthey recommend a client pursue, meaning you may not be getting themost "objective" recommendation.

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It's important that plan sponsors and benefit managers work witha consultant or advisor who will follow an objective process and iswell-versed in how to evaluate both PBM models. For example,consultants who work with new, objective tools and resources tohelp them look at different aspects of the evaluation methodologycan offer a more accurate point of view on your organization'sprojected drug spend and may be better at comparing traditional vs.pass through models.

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While the word "transparency" is commonly used across the PBMindustry, the reality is that not all transparency is createdequal. Ultimately, transparency should be an operational way ofdoing business that translates into lower costs. Making the mostcost-effective decision for your organization relies on having aclear view into PBM business models, your desired level ofinvolvement in managing the pharmacy benefit, and ensuring yourcompany works with objective advisors. True transparency shouldalign with your company's business goals and provide the ability tohave open access to all pharmacy benefit data, so you can controlyour drug spend.

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Byron MickleByron Mickleis the senior vice president, sales and marketing at Navitus, a pharmacybenefit company committed to lowering drug costs and offering a100% pass-through approach. With more than 30 years of experiencein the PBM industry, Byron oversees and provides executiveleadership for Navitus' Sales and Marketing Departments.


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