Wouldn’t it be nice in the already complex industry of pharmacy benefits that all pharmacy provider contracts were created equal? Unfortunately, we aren’t so lucky. All pharmacy benefits managers (PBMs) and integrated carriers draft contract language to their own benefit and use their own processes to create their offers. So, the resulting proposals can be skewed any number of ways, and it can be incredibly difficult to compare each offer in a balanced way. The pressure is on to make sure that each pharmacy benefit analysis is reviewed in a fair and balanced way so that you are confident your client is in the best arrangement.
Here are some proven tips to help you evaluate the pharmacy contract terms and language on an apples-to-apples basis. These are some of the most common contract optics that could unexpectedly skew your clients’ pharmacy plan performance if you’re not careful.
- Analysis Process
Making sure that the same claims are being compared. Some pharmacy managers will throw out a claim on one side and keep it in another, or in the fine print, the analysis will show that a high number of claims were thrown out and not considered. Make sure the exact same claims are repriced and compared against all options, and if it seems like a large quantity of claims were not considered – ask why. This keeps things fair and equal. - Definitions
It is not uncommon for the way a claim is defined in a contract, to not be how it is counted at reconciliation. Many pharmacy managers look to exclude drugs with a poor discount from the generic reconciliation as it makes it more difficult to meet their generic guarantee. One example of this would be single source generics and/or dual source generics being counted in the brands. These tactics can artificially inflate the performance of certain classes of drugs.
- Other Factors
Some other optics we see in pharmacy analyses are:
a. Inflation
Adding inflation into an analysis and take credit for this artificial additional savings.
b. Generic Dispensing Rate (GDR)
Trending the current GDR and saying it will be x% over the course of the contract terms – adding the delta to the estimated savings number. Given whatever the proposed GDR increase is completely based on conjecture and not guaranteed savings.
c. Member Utilization
Projecting additional member utilization without any clinical basis or fact for doing so.
The Bottom Line
Be wary of a pharmacy analysis that requires cloaked language, terms, conditions, hidden assumptions, and significant changes to achieve the savings. When you unmask the terms and conditions hidden in each contract, you can better analyze the contract’s overall value, compare offers, and make the best decision for your clients.
