Pharmacy Benefit Blog

Making sense of your PBM plan review

Posted by Chris Hanson-Ehlinger on Fri, Mar, 29, 2013 @ 16:03 PM

Making Sense of your PBM Plan Review

If your plan is on a calendar year, March and April are the months that most PBMs target for plan reviews detailing last year’s results. Most PBMs provide a comprehensive set of reports filled with numbers and colorful graphics that illustrate your plan’s performance. You can also expect that a large portion of your review will be devoted to discussions about additional plan management strategies. More than likely, your PBM account team is evaluated and often rewarded for selling your organization new programs.  A word of advice…have an expert set of eyes review the reports and recommended new programs.  Some are valuable. Others less so.  But, it’s not always easy to distinguish the difference.

Here are four essential areas to pay close attention to:

Specialty Pharmacy – Without question, specialty pharmacy is the most significant driver of drug trend. It is not unusual to see specialty costs increase 20 to 30 percent annually. Unfortunately, because the number of specialty claims is very low—perhaps 1 percent or less of total claims – and the individual claim cost is extremely high, specialty pharmacy is not a cost area that can be managed by increasing member contribution. Exclusive provider relationships, prior authorization, step therapy, preferred product selection and other formulary management techniques do help manage specialty pharmacy costs. The next generation of managing specialty costs will be to take the techniques used under the pharmacy benefit and extend them to the medical benefit.

Traditional Medications – There is considerable opportunity to generate savings in the area of traditional, non-specialty medications. In 2012, many plans saw a negative trend in traditional medications due to the savings generated when generic equivalents replace brand only medications. Generic savings opportunities in the years ahead will not be as profound as in 2012, but there will be significant savings nonetheless. If your plan failed to achieve a generic fill rate of 80 percent of total claims or greater in 2012, you’ve likely missed the full savings potential offered by generics. Financial incentives, formulary management and step therapy are all effective tools for increasing the use of generics in you plan.

Compliance, Adherence, and Gaps in Care – PBMs may recommend ways to address compliance, adherence and gaps in care at your annual plan review. Intuitively, these programs make sense and should be considered. Optimizing care is (or should be) a goal of every plan sponsor. Do be cautious, however, about program costs. PBMs assess an additional fee to implement such plans either on a per-member or per-claim basis. The PBM may cite clinical trials to show how the programs reduce hospitalizations, improve compliance and fill gaps in care. A word to the wise: do the math. The link between compliance programs and cost savings may be tenuous.

Retire Old Programs – Every annual review should include an update on existing management strategies. It is possible that a clinical initiative or utilization management approach that made sense in the past has outlived its purpose. For example, many step therapy modules were implemented to direct members to lower cost alternatives before using a higher cost brand. As more and more brands become available as generics, the need for step therapy in some therapeutic categories may no longer be necessary. Any program that carries a per-member or per-claim fee should be reviewed regularly to confirm its continuing value.

Again, if you are unsure about your PBM’s reports or performance, ask for a second opinion. When you understand your plan, you are better prepared to define and effectively manage your strategy.

Feel free to share other questions you may have about your annual PBM plan review.


Craig Oberg is a pharmacist and managing consultant at The Burchfield Group. He works with national employers to develop strategic PBM management plans.


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Topics: PBM annual plan review


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