Follow the Pill, Follow the Dollar

Have you ever tried to follow the flow of cash, product, and contractual relationships through the U.S. Pharmaceutical Supply Chain?

I incorporated this question into the latest episode of Wee Dose of Radical Transparency.

You can watch the full-length episode below:

Believe me, it gets complicated, quickly.

In the most general sense, as a steward of employer sponsored healthcare, you’re fully aware that when a prescription drug is dispensed at the pharmacy counter, your plan members pay cost sharing to the pharmacy, which usually consists of a co-payment or co-insurance. And, likewise, you understand that your pharmacy benefit manager determines what you pay the pharmacy.

But have you ever given thought to how your plan is affected by each piece & part of the cog? And, ultimately, what these components mean to your bottom line?

Hear me out for a minute. Before the drug even touches your plan members hands, there are five players at work in the system. 

-Manufacturer

-Wholesaler

-Pharmacy Benefit Manager

-Plan Sponsor

-Pharmacy

Each player, including you, the plan sponsor are inter-connected by product movement, contractual relationships and, most importantly, cash changing hands. 

Pharmacies are reimbursed by pharmacy benefit managers based on ingredient cost and dispensing fees less co-pays or co-insurance. The PBM contracts with manufacturers for access to pharmaceuticals and, in turn, receive admin fees & rebates. Pharmacies do not warehouse drugs. It takes wholesalers to purchase from manufacturers for distribution to pharmacies. 

With so many players involved, how can you be sure that you and your plan members aren’t being taken advantage of and you are purchasing services in a fully transparent way?

Quick simply, embrace reverse auction style purchasing. Reverse auction PBM purchasing is something you should be demanding from your employee benefits advisor. It’s the way you can ensure every aspect of your PBM procurement process is fully transparent and you are getting the absolute best pricing. 

If you’re interested in this concept of transparency and want to learn more, we offer a contract health assessment through our ApexRx program.

You can look in the description for the link to our ApexRx program of just reach out to me at [email protected]. You could always connect with on LinkedIn too, or find me at apexbg.com/Scott-Long.