Finding True PBM Transparency

Transparency is a way to validate that your PBM is doing what it said it would do. At the start, your benefit plan was quoted at a set group of costs, typically with rebate and savings guarantees, and other key metrics agreed to in the contract.

A typical PBM contract is three years in length, so over that time period you’ll need a way to validate what the PBM is doing from a cost standpoint, but it goes beyond measuring performance. That’s where operational alignment comes into play. If you’ve partnered with a PBM that promotes collaboration and plan flexibility, then you can make changes to respond to what’s going on in the marketplace (for drug costs) and make changes based on the shifting health pool of your members or employees.

In a traditional model, the PBM could be incentivized to deliver on guarantee metrics but you may end up paying more than you expected. And, PBM spread could limit your ability to discuss cost trends and make plan changes.

In a pass-through model, all costs are disclosed upfront, visible and are consistent year after year for the PBM contract term. Here, you’ll have access to all cost trend information and data, and your PBM is more flexible and will work collaboratively to make plan changes.

Understanding the two types of transparency, cost and operational, allows you to leverage them to your advantage. A lack of transparency may impact your benefit plan, leading to unnecessary costs or decisions made in the PBM’s favor vs. yours, in each of these areas:

Cost transparency:

1. 100% visibility into all pharmacy benefit costs
2. 100% pass through of drug manufacturer dollars
3. An immediate benefit of 100% from all network and pharma contract improvements
4. Third-party determination of brand and generic definitions
5. Access to a PBM’s contractual agreements throughout the pharmacy supply chain
6. Audit rights to claims and invoices
7. A single MAC (maximum allowable cost) list for generic drugs applied consistently across all distribution channels

Operational transparency:

1. Visibility and access to your benefit plan design
2. A constantly optimized formulary in a pass-through model
3. An ‘all-access pass’ to PBM pharmacy and therapeutics (P&T) and formulary advisory committees (FAC)
4. Industry relations (IR) and utilization management (UM) are not influenced by PBM's finance team
5. When a PBM’s account and clinical teams are not a profit center
6. When a PBM offers in-house services for maximum control on spend
7. A single data access point and reporting platform

In Closing
If your goal is to lower plan costs while improving member health, you are going to want to see where your benefit dollars are being spent. The only way to validate this is if your PBM offers full transparency on costs and operations that you can verify through audits. Learn more in our e-book: Finding True PBM Transparency