Benefit Consulting Insurance

Pharmacy Benefit Management Solutions

Our pharmacy benefit management (PBM) consulting division, Benefit Consulting Rx, is all about creating customized pharmacy solutions for the self-funded employer that are sustainable over the long term. We work exclusively with our broker partners to provide PBM contract reviews, implementation strategies, and sales and service support — all at market-leading pricing. We represent multiple PBMs, from the top three competitors to niche PBMs that provide innovative solutions.

That way, we make sure the needs of your employer clients are met. Because it’s not one-size-fits-all.

A long history of PBM expertise

Our PBM specialists are just that, experts in the field of placing self-funded employers with pharmacy benefit solutions that best suit their needs. That’s what they do, and that’s all they do. Nothing else. Our experts stay on top of the legislation and innovation that affect how PBMs are run to help you stay on top of your game.

The end game? To help your employer clients access best-in-class pharmacy management that keeps costs down and their employees happy.

We can assuredly say, at BCI, we know pharmacy.

Committed to PBM transparency

We strongly believe in providing our broker partners several options that fit their needs. They look to us to provide unmatched backroom support whether it be with pricing, plan design, or implementation strategies.

Through a formal, objective, and repeatable process of collaboration and transparency we give our broker partners PBM designs that:

  • Maximize savings
  • Optimize the employer’s total health benefits and pharmacy plan
  • Eliminate provider network, pharmacy, and prescription disruption
Calculator and stethoscope

We can achieve 10% to 30% savings on 1-Year pricing

How do PBMs work?

Pharmacy Benefit Managers work with insurers and plan sponsors to identify what drugs will be on the preferred list of covered drugs (or drug formulary), they manage the formulary on an ongoing basis, and they process claims. They also receive rebates from the drug makers for the drugs that are placed on the formulary.

Currently, 96 percent of all drug spend is processed through PBMs. PBMs are an important part of the pharmaceutical ecosystem. Through the rebates they receive from drug manufacturers, PBMs are expected to bring down the drug costs for employers, as they can pass all, some, or none of the rebate on to the employer or plan sponsor. The employer, in turn, can choose to pass on those savings to their employees through lower cost-sharing.

How do PBMs work?

Pharmacy Benefit Managers work with insurers and plan sponsors to identify what drugs will be on the preferred list of covered drugs (or drug formulary), they manage the formulary on an ongoing basis, and they process claims. They also receive rebates from the drug makers for the drugs that are placed on the formulary.

Currently, 96 percent of all drug spend is processed through PBMs. PBMs are an important part of the pharmaceutical ecosystem. Through the rebates they receive from drug manufacturers, PBMs are expected to bring down the drug costs for employers, as they can pass all, some, or none of the rebate on to the employer or plan sponsor. The employer, in turn, can choose to pass on those savings to their employees through lower cost-sharing.

The problem of artificial drug inflation

Since 1991, rebates from drug manufacturers to PBMs have safe harbor protection, they are exempt from federal rules prohibiting kickbacks, and they can operate virtually unchecked. Some might say herein lies the problem.

In recent years, the lack of transparency has come to be scrutinized by federal and state regulators and other watchdogs. For example, a recent study by the University of Southern California shows that there is a direct correlation between the list and rebate prices of a drug. The study states succinctly, “On average, a $1 increase in rebates is associated with a $1.17 increase in the list price.”

In other words, there is no actual cost reduction because the drug maker artificially raised the list price on the back end, so by the time the rebate comes around, the cost to the employer doesn’t decrease. The employer pretty much has to pay the list price. And often, consumers are stuck with higher premiums, copays, or deductibles to help offset the high sticker price. In this scenario, the only beneficiaries of the rebate are the drugmaker and the PBM with additional profits.

How is the Rx drug cost problem corrected?

There are a few key ways that can help bring down the cost of drugs to the consumer (and one of those ways is in the employer’s power):

1 - Eliminate the rebate model.

This one is tricky, as even if rebates prohibited by the federal government, it doesn’t prevent drug makers from assigning high list prices to their drugs. (Currently, the “Rebate Rule” that the Trump Administration finalized on their way out of the White House has been placed on hold by the Biden Administration until January 1,
2023, to review its entire impact on Medicare Part D and
its recipients.)

2 - Allow states to require more transparency around drug pricing.

This is actually happening as we speak. In December 2020, the U.S. Supreme Court cleared the way for state oversight of PBMs. And there are plenty of states that have laws on the matter. The infographic below (whose data is taken from the National Conference of State Legislatures page, “State Policy Options and Pharmacy Benefit Managers (PBMs)” shows just how many laws there are across the country that aim to check the power of the PBM.

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NCLS

3 - Let healthy competition do its thing.

While it’s true that the 3 giants (Express Scripts, CVS Caremark, and OptumRx) account for 80 percent of the PBM market, there are also niche PBMs that are incredibly important to the ecosystem.

Because of their smaller size, niche PBMs can also be nimbler and more innovative. They can sometimes do what the giants don’t.

4 - Go self-funded.

Employers with one hundred or more employees can take control of their own PBM. They can contract directly with the PBM (not with the carrier). That way, the employer can receive rebate savings, with a certain amount often guaranteed in their contract.

However, there are nuances to PBM contracts that even the savviest benefit managers and brokers would miss (like reclassification of drugs to steer employees to use more expensive options or markups to claims).

Friends having coffee together

It’s important to have a knowledgeable advocate by your side to help steer your employer client to a healthy PBM relationship and enjoy long-lasting savings.

At Benefit Consulting Insurance, we negotiate with multiple PBMs ­­– from the giants to middle-sized and smaller companies – to provide a clear picture of the pharmacy solutions that are available for employers.

We can achieve up to 30+ percent savings in the first year and continue saving over a three-year period compared to the current pharmacy solution.

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