We have all heard the saying, “What you see is what you get”. Unfortunately, that saying does not apply in the PBM Industry.
PBM Contracts are very complex and many times open to interpretation. The majority of the time, it results in favor of the PBM.
So, if you are considering a contract renewal, this is an excellent time to have your contract reviewed and let the experts provide key recommendations. This will allow you to strengthen your contract, both financially and operationally.
Each year, we work with dozens of clients to help them with a wide range of pharmacy benefit services, including:
- PBM Procurements
- Contract Renewals
- Contract Negotiations
- Annual Market Checks
- Contract Performance
- Pricing and Benefit Plan Audits
Consulting on such a wide range of audit and contracting engagements keeps us at the forefront of the ever-changing PBM Pricing Strategies and Contracting Methodologies.
We like to tell our clients, that sitting down to negotiate a contract can certainly seem daunting, overwhelming, however, the process doesn’t have to be. As we guide our clients through the process, we ask them to focus on a few key items that can honestly make a world of a difference.
Click on the video below to learn about what we look for in PBM Contracts:
First, Terms and Definitions.
You may be thinking to yourself, “How hard can this be?” The simple answer is that there are so many variations to one definition! Take for example, Brand and Generics. There can be a large variance in how those are defined.
We want to make sure that they are defined by one source and that that definition carries through the life of the contract and in all areas. Things like the member cost share, what the plan’s going to pay, rebate eligibility, audits, and so forth.
Again, keeping it consistent.
Next, we also want to make sure that you are confirming that your audit rights and reconciliation methodology are present in the contract and that they are explicit. Verifying that inclusions and exclusion categories are appropriate, and they don’t allow PBM’s to manipulate those categories in their favor and not in yours.
Third, validate that the pricing guarantees and rebate strategy is best in class. A lot of times, clients will ask about multi-year contracts. Asking questions like, “Should I do them?” “Do I not want to do them?”
The simple answer is yes! There is no reason not to, with a few caveats.
- Make sure that you have multi-year component escalators
- Make sure you have market check provisions
With these items in place, you can be confident that you have set yourself up to have a market competitive pricing terms throughout the terms of your contract.
While PBM Contracts can be very complex, these three things are essential to making sure you get maximum results. That’s what we love to help you with as you look at renewing your contracts. Our advice to you is, allow your consultants to guide you through that process and to also put in that time and effort, to ensure you have a long-term successful relationship with your PBM.