PillarRx has posted several articles focusing on industry best practices and strategies when it comes to contracting with a PBM. However, did you know signing a bad contract with a PBM audit and consulting vendor can prove to be just as costly?

Here are five red flags you should look for before signing on the dotted line with an auditing and consulting vendor.

1. Contingency based price modeling

A true audit cannot include a conclusion prior to reviewing past PBM performance. If your vendor pricing is contingency-based or an ROI is provided before conducting the audit, the cost-savings opportunities may not exist.

2. Compensation based on variable annual pricing

Some vendors are being paid based on a percentage of your drug spend. If the drug spend increases, the consulting company is paid more money. Crazy, right? This scenario actually does occur and is counter-intuitive to the value your pharmacy consulting company is supposed to be providing! Your PBM consulting company should be helping you to drive the lowest net cost. If their compensation is based on your overall net cost, are their incentives aligned?

3. Audit and consulting companies compensated directly by PBMs

These vendors, when auditing the PBM or PBMs they are being compensated by, may not “uncover” all areas for improvement. Results may be biased and all potential cost-savings or revenue-generating opportunities may not be reported if they have a negative impact on the vendor or PBM’s bottom line.

4. Are you sure your vendor will be able to perform the intended scope of work?

Due to one of the items listed above or additional circumstances, a PBM may not allow the vendor to perform any or all of your agreed-upon services. Learning your vendor won’t be able to fulfill their obligations after signing the contract, means you’ll have to look for an additional vendor or skipping that service altogether. Neither outcome is ideal for your team, and could delay the entire project.

5. 100% pharmacy claim review vs. sampling

The only way to truly evaluate a PBM’s performance is to utilize 100% of all pharmacy claims. Errors found on less than 1% of claims can represent hundreds of thousands of recoupment dollars. If an audit and consulting vendor relies on sampling, these pharmacy claims will typically be missed and can lead to incorrect future pharmacy benefit recommendations.

For these five reasons alone, it is essential to do your research on the pharmacy benefit consulting and auditing company you choose to work with. Click here to read testimonials from customers and learn more about our auditing and consulting methodology.