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www.starnewsgaonline.com StarNews September 10, 2023 Page 15
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Marcy
HEATH
Cracking the code: inside Pharmacy Benefit Managers’ secrets and the push for change
678-821-3508
J marcy@be
inoventive.com
With lawmakers and regulatory authorities
intensifying their scrutiny of the largest phar
macy benefit managers in the country, there is
potential for you and your employees to reap
benefits. Phannacy Benefit Managers (PBMs)
play a vital role in the realm of health insurance
by forming contracts with insurers and self-
insured employers to manage the costs of
medications.
Recent reports have raised doubts about the
extent to which these influential entities truly
assist employers, health plans, and policyhold
ers in saving money.
Moreover, allegations have surfaced that
PBMs tend to retain a substantial portion of the
savings they generate, rather than passing those
savings on to their clients and individuals
enrolled in health plans.
Consequently, PBMs have become subjects
of investigation by various state attorneys gen
eral, as well as more recently, by regulatory
bodies and the Congress. There has been bipar
tisan introduction of legislation aimed at
enhancing transparency within these covert
organizations and ensuring that payers receive
a larger share of the rebates and other cost
reductions generated by PBMs. Virtually every
health plan maintains some form of arrange
ment with a PBM, meaning that any alterations
in their operational practices could potentially
lead to reduced pharmaceutical expenses for
patients.
How they operate
PBMs function as intermediaries, serving as
intermediaries among insurance companies,
self- insured employers, drug manufacturers,
and pharmacies. Their stated objective is to
manage phannaceutical costs for both employ
ers and individuals enrolled in health plans.
In general, PBMs establish agreements with
insurers (or self-insured employers) and phar
macies. They impose fees on health plans for
overseeing their prescription drug claims and
fonnulate lists specifying the prices pharmacies
are compensated for each chug.
Frequently, the amount the health plan pays
for a particular drug surpasses the sum the
phannacy obtains for it. The PBM captures the
difference between these two amounts. A sig
nificant critique of PBMs is their use of
obscure contracts that obscure costs from both
health plans and phannacies. This is achievable
because the health plan lacks insight into the
PBMs arrangements with phannacies and dmg
companies. Additionally, the plan remains
unaware of the intricate details of the PBMs
agreements with its competitors.
Practices under scrutiny
Spread Pricing - A PBM charges health
plans more than it pays the phannacy for a
medication and retains the difference in cost.
Rebates - PBMs receive rebates from drug-
makers in exchange for the PBM giving their
products preferred status and greater market
share on the plan fonnularies.
Clawbacks - These are remuneration fees
that phannacies that dispense Medicare Part D
(outpatient) drugs must pay PBMs, which can
charge these fees long after a phannacy has
filled a prescription.
Legislation
As of May 8th, there were four new meas
ures on PBM refonns that were passed by the
Senate Health, Education, Labor and Pensions
Committee. All bills aim to make PBMs more
transparent and would eliminate several prac
tices observers say are causing most of the
problems.
The effect on health plans
There is a robust inclination within Congress
to control PBMs, and should any of these pro
posed bills be enacted, they
would probably introduce
heightened regulation and
transparency to the sector.
Although the response of
PBMs and the potential
adjustments to their method
ologies remain uncertain,
these legislations hold the
possibility of diminishing
expenses for employers through decreased pre
miums, as well as for employees through low
ered out-of-pocket costs.
Transparent PBM
Imagine a scenario where an employer is
diligently striving to offer comprehensive
health coverage for their employees. They’ve
chosen a health plan that involves a Pharmacy
Benefit Manager (PBM) to help manage pre-
... allegations have surfaced that scn P tlon dru s
Pharmacy Benefit Managers tend
to retain a substantial portion of
the savings they generate, rather
than passing those savings on
to their clients and individuals
enrolled in health plans.
costs. However,
hidden behind
complex contracts
and opaque deal
ings, this PBM is
retaining a signifi
cant portion of the
cost savings gener
ated from negoti
ated drug prices.
In this situation, the lack of transparency
becomes a major obstacle. The employer
remains unaware that the PBM isn’t passing on
the full extent of the savings to their health
plan. Consequently, employees who rely on
this coverage might still be facing higher out-
of-pocket costs for their medications, despite
the employer’s efforts to provide quality
benefits.
Having a transparent PBM becomes impera
tive in this context. With clear insight into the
PBMs operations and its dealings with drug
manufacturers and phannacies, employers can
ensure that the intended cost savings actually
reach their employees. Transparent PBMs
empower employers to make infonned deci
sions about their benefit plans, optimize sav
ings, and provide more meaningful healthcare
coverage for their workforce.
For further information on how you can
obtain a transparent PBM within your health
plan, contact Inoventive Benefits Consulting
today at 678-821-3508.
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