Maximizing Health Benefits Savings with Smarter Pharmacy Management

In today’s complex healthcare environment, managing prescription drug costs is more critical than ever. Rx is also where you can most reality impact your employee benefits spend with very little disruption to your employees. In other words this is the Low-hanging fruit opportunity for #employers!

We at The Bachan Group are committed to helping you navigate these challenges and optimize your benefits strategy. Recently, insights from several top #pbm partners highlighted key strategies for getting more out of your pharmacy benefits. Here’s a summary of how you can leverage these insights to drive savings and improve the management of your pharmacy benefits.

The Rising Cost of Prescription Drugs

Prescription drug spending in the U.S. is alarmingly high, with Americans paying 2.5 times more for medications than citizens of other high-income nations. Nearly one-third of U.S. adults struggle to take their medications as prescribed due to these high costs. This situation underscores the need for a more effective approach to managing pharmacy benefits.

Understanding Pharmacy Benefits Managers (PBMs)

PBMs play a crucial role in managing pharmacy benefits. They work with health insurance plans to negotiate drug prices, manage formularies, and establish pharmacy networks. However, the effectiveness of a PBM can vary widely depending on its structure and compensation model.

Types of PBMs:

• Big 3 PBMs: Large, national entities like Express Scripts, OptumRx, and CVS Caremark.
• Mid-Market PBMs: Regionally focused organizations offering more localized service.
• Transparent PBMs: Smaller entities that operate on a 100% pass-through model, with revenue earned solely through administrative fees and all rebates passed back to the client.

Carving Out Pharmacy Benefits

One of the most impactful strategies discussed is the decision between carving in or carving out pharmacy benefits:

• Carve-In: Pharmacy benefits are integrated with your medical benefits under one contract, simplifying management but potentially limiting cost visibility and savings opportunities.
• Carve-Out: Pharmacy benefits are managed separately, allowing for greater flexibility, control, and the ability to implement targeted cost-saving programs. However, this approach requires more oversight and can fragment the member experience.

Factors to Consider:

• Current pharmacy benefit costs and how they are managed.
• Potential impacts on fees from your medical health plan vendor.
• Necessary changes and adjustments to your plan’s structure.

Evaluation Strategies for PBM Selection

When considering a PBM, it’s essential to evaluate:

• How the PBM is compensated (per-claim, PMPM, or other fees).
• Integration capabilities with your medical insurer.
• The implementation process and member support services.
• Technology solutions that enhance plan management and transparency.

Key Takeaways for Maximizing Savings

1. Align Your Moves with Financial Goals: Ensure that any changes you make are goal-oriented and support your company’s financial objectives.
2. Ask the Right Questions: Delve into fees, implementation, integration, member experience, and technology before making decisions.
3. Seek Control: A carve-out model, while requiring more work, can provide significant financial benefits by giving you greater control over pharmacy benefits management.

Next Steps

We encourage you to assess your current pharmacy benefits strategy and consider whether a carve-out approach might offer more significant savings and control. Our team at The Bachan Group is here to help you evaluate your options and implement the best solution for your organization.

Let’s Talk About Your Options If you have any questions or want to discuss how these strategies can be tailored to your company’s needs, please reach out to us. We’re here to help you navigate the complexities of pharmacy benefits and unlock potential savings.

Best Regards,

Blane Bachan, Managing Partner

This newsletter summarizes strategies from our PBM Partners on how to maximize pharmacy benefits while controlling costs, offering actionable insights to help you improve your benefits management.