People who know Pharmacy Benefit ManagementThe described option is not for all payers. Companies that have the capacity and internal operations to engage in this “new generation” pharmacy model have been identified as the Managed Care Organizations, Insurance Companies and perhaps some Third Party Administrators.
The outline of vendors listed on the next page templates the model that has been used for years with the one-stop shopping approach when going to a single source for all services provided. The single source PBM offering full service capabilities may actually own only a few of the components themselves and subcontract the rest.
What has been brought to light in the past year under media scrutiny is that the fully bundled program leaves the payer paying a much heftier drug bill than necessary. Margins are found in every key operational area of the PBM arrangement. Payers should beware: their full service PBM may come back with a more attractive offer but it is highly likely that the profit will be buried in another component this year. An example is when a PBM gives up network spread, they’ll focus on the preferred drug list/formulary and MAC lists to recover the profit.
Unbundling the varied services provides a greater knowledge of the actual ingredient costs of prescriptions, a greater control of product selection, revenue gain from the formulary rebate proceeds and reduced administrative costs. The savings generated are a minimum of 10% on overall drug spend but typically programs are adopted gradually as different components are brought in house.
ARMSRx usually recommends an incremental approach to this type of program. According to the areas with greatest potential impact and the payers available resources, each component is considered and determined for immediate implementation. For instance, assumption of the retail networks may be deferred until internal resources are available to successfully manage the project. Ultimately there are various components of pharmacy benefits management that will remain in an outsourced environment such as mail order pharmacy and specialty pharmacy.
