PUTT President: PBM trickery harms employers

PUTT President Dave Marley offers his take on new data from the National Community Pharmacists Association in a new blog post.  Read the post on BenefitsPro.com and below…

Lack of PBM transparency harms employers

It’s not uncommon to find pharmacists who feel frustrated with abusive practices and the complete lack of transparency from pharmacy benefits managers, the third-party administrators of prescription drug programs.

But abuse by PBMs of local pharmacies is not only bad for the drug store on the corner. It’s also a big problem for many companies. PBM abuse and fraud can impact the bottom line and puts more pressure on the benefits managers who work with PBMs on a daily basis to make sure they are not being exploited.

It’s not uncommon to find pharmacists who feel frustrated with abusive practices and the complete lack of transparency from pharmacy benefits managers, the third-party administrators of prescription drug programs.

But abuse by PBMs of local pharmacies is not only bad for the drug store on the corner. It’s also a big problem for many companies. PBM abuse and fraud can impact the bottom line and puts more pressure on the benefits managers who work with PBMs on a daily basis to make sure they are not being exploited.

A new report from the National Community Pharmacists Association recently exposed the challenges many community pharmacists face in dealing with large PBMs. The poll of more than 350 community pharmacists showed that a majority of pharmacists feel that:

  • A typical PBM contract has minimal or no transparency on pricing and reimbursement rates to pharmacies are determined.
  • PBM reimbursement and auditing practices negatively affect pharmacies’ ability to provide patient care.

Working with PBMs has historically been tricky for independent pharmacies. Now, it’s becoming increasingly obvious that PBMs are using some of the same tricks on large employers as they are on ‘mom-and-pop’ pharmacies. Large PBMs are not only making it harder for independent pharmacy patients to receive the quality of care they deserve, they’re also adding to their profits at the employers’ expense by using a tactic called “spread pricing.”

Here’s how it works: PBMs use intentionally vague terminology when billing employers, thereby keeping them unaware as to the real cost of a drug.  And while employers generally assume they’re paying the same amount as what the PBM gives the pharmacy plus a small administrative fee, PBMs are notorious for marking up the drug price and pocketing the difference.

For benefits managers to ensure their company is not spending too much on prescription medications and contributing to a PBM scheme, it’s important to ask the PBM to provide an explanation of its reimbursement terms with network pharmacies.  Doing so will help the employer avoid getting hit with a price mark-up.  As the costs of prescription medications continue to increase, a leading cause of the sky-high prices is the profiteering of pharmacy benefit managers.

By helping to ensure PBM transparency, HR professionals can help their own companies and help keep drug prices down across the board.