Make narrow networks, benefit adjustments, work for your plan

By Chris Hanson-Ehlinger
Tue, Dec, 09, 2014 @ 14:12 PM

Phil DeNucci, pharmacy benefit planssUntil the Express Scripts/Medco fallout a few years ago, the issue of pharmacy network access rarely surfaced. Now, with more narrow networks in place, some plans worry about trading savings for access. No worries. Most pharmacy networks are so large that calling a scaled back network narrow is something of a misnomer.

Narrow pharmacy networks are available from most prescription benefit managers (PBMs). There are several ways to limit a network. You can:

  • Eliminate one or two chains, a grocery chain or a big box retailer. The remaining pharmacies provide steeper discounts that may save you 2 to 3 percent in gross costs.

  • Offer a single chain network with backfill from grocery chains and independent pharmacies. This option drives greater savings at the single chain and improves pricing for the grocery chains and independents.

  • Gain the steepest discounts when you select a single-chain network with minimal backfill with independent or single store locations to accommodate geographical access.

If you choose to explore a narrow network plan, make sure your PBM can quantify the network’s value. Consider these questions:

  1. What pharmacies do your participants use and will access be a problem?

  2. Are some pharmacies already outperforming the contracted deal and passing savings to you via usual and customary (U&C) pricing?

  3. Can the PBM model network savings and participant impact?

  4. Is a mail order option available for individuals concerned about losing the convenience of a pharmacy on every corner?

In some cases a benefit change may deliver better results for your plan than will a narrow network. As an alternative to removing stores, you can establish a benefit design that favors a certain chain. This design ‘limits’ or ‘prefers’ certain pharmacies in the benefit design. A preferred chain generally offers lower copayments or provides 90 days of medication. Other pharmacies are typically accessible with limits, such as a higher copayment or the ability to only dispense 30 days at a time. Contracted discounts at the preferred chain can be as much as 10 percent lower.

Recognize that it takes planning, expertise and experience to make a network or benefit transition work smoothly. Make sure you are well-informed before implementing a change and when necessary, ask for expert help and guidance.

Phil DeNucci, RPh, is a managing consultant working with Burchfield’s key self-funded employer and coalition accounts to help them manage their pharmacy benefit programs. For more information please call 800-778-1359 or send us a note (

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