Are Pricing Guarantees Better or Worse For Plan Sponsors?

Posted by Navitus Health Solutions on Oct 24, 2019 6:00:00 AM

Answer: Depending on your pharmacy benefit manager (PBM) contract you may or may not be getting the 'upside performance' you’re entitled to. 

Over the course of a three-year contract, pass-through PBMs will give you back any 'upside performance', like a pharmacy discount, rebate negotiations and/or better drug pricing. Unfortunately, that's not the case with other PBM models.
 
Why the PBM model matters

Most pass-through PBMs offer minimum pricing guarantees as a 'starting point' and pass additional savings back to plan sponsors. Traditional PBMs manage to capped pricing guarantees, keeping any extra savings for themselves. Over the PBM contract term these differences add up. So why not pocket the upside performance and use it to lower your pharmacy benefit costs?

 

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An example of this is ‘price protection', according to Drug Channels Institute, “List price increases above the ceiling (capped guarantee) trigger additional rebate payments.”1 Depending on your PBM contract you may or may not be getting these extra rebates.

 

which model should You choose?

'Capped guarantees' when using a traditional PBM are good for those looking for a ‘do not exceed’ model.

'Un-capped upside performance' when using a pass-through PBM is  good for those looking to retain any rebates or discount improvements.

 
Want to know more?

Download our e-book: 7 things you need to know about pharmacy benefit management (PBM) models!

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Download the E-book

 

1 The 2018 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers, Drug Channels Institute, page 122, https://drugchannelsinstitute.com/products/industry_report/pharmacy/ (As viewed on 01/2019)

Topics: Insider

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