Why Alternative PBMs Are Winning Employer Trust

There’s multiple reasons why employers are shedding existing relationships with the jumbo Pharmacy Benefit Managers (PBMs) in favor of alternative PBM models. Lori Daugherty, CEO of RxLogic, published a thought-provoking article in BenefitsPRO that highlighted these motivations:

• More attractive pricing
• Increased transparency
• Aligned incentives
• Greater control over data and plan design
• Improved patient care

Why Traditional PBMs are Problematic

Daugherty explains, “Behemoth PBMs camouflage pricing with hidden fees, implement rebate-driven policies and utilize outdated data reporting systems that introduce inefficiencies that actually increase expenses, limit transparency and restrict flexibility. Their opaque practices, rigid structures and excessive utilization of intermediaries make it difficult for plan sponsors to determine how much they truly pay for medications.”

She cites industry forecasts that over the next 5–10 years, PBMs will evolve into fully integrated, technology-enabled platforms that provide real-time visibility into all aspects of the pharmacy ecosystem.

Limitations of Traditional PBMs

• Restrict employer and insurer visibility into how much PBMs reimburse pharmacies, how much they retain from manufacturer rebates and why certain high-cost drugs are favored over more affordable alternatives.
• Steer plans toward medications that generate the highest rebates, ultimately driving up costs and steer patients toward in-network pharmacies that maximize PBM revenues.
• Employ rigid controls that prioritize PBM profits over patient affordability and access.
• Create a multi-layered pricing system, adding markups at each level before costs reach the employer and resulting in inflated prices with limited visibility into actual medication costs.
• Implement spread-pricing: charging insurers more than they reimburse pharmacies.

Technology is the Key to Making the Transition

Upending longstanding relationships with large PBMs requires the support of smart technology and innovative solutions. But few – if any -- alternative PBM models have the internal resources or capabilities to deliver on this promise. To provide these competencies, they are partnering with RxLogic, an industry leader with a track record to deliver:

• Real-time data
• Proven claims adjudication solutions
• Experienced leadership team
• Technology expertise
• Comprehensive clinical and client services
• Data-powered pharmacy solutions
• Proven financial services
• Force employers and health systems into rigid benefit structures

Future-Forward PBMs Embrace Technology, Transparency and Integration

As alternative PBMs displace traditional, obsolete models, they will increasingly rely upon technology-driven advancements that provide access to actionable data, true cost visibility and customizable models that optimize pharmacy benefits. As a result, these new-age PBMs can more effectively compete for market share and bring greater value to clients seeking cost predictability and improved patient outcomes.

Daugherty projects that interoperability will become a standard expectation throughout the industry: “PBMs will cease to perform as opaque middlemen as they transition to a more valuable role as transparent, patient-first facilitators that connect all stakeholders in the pharmaceutical supply chain. The regulatory environment is changing as the industry shift is already underway, ushering in a new era for controlled costs, enhanced efficiency and improved pharmacy benefit management. Our entire RxLogic team is proud to be a leading player in this future.”

Read the full article here.