Who Are The Middlemen?
As prescriptions are on the market longer, manufacturers multiply and generic versions are created, the cost of drugs decrease. So, why are premiums continually rising? The answer is…Pharmacy Benefit Managers or PBMs. Also known as the infamous “middlemen”.
What is a PBM and What do they do?
A PBM is a third-party administrator who acts as an intermediary for prescription drug programs. In other words, they are the middlemen between employers and pharmacies. On one side, the claim goes from the pharmacy to the PBM. The PBM decides what they’re going to pay the pharmacy and that data flows back to them. On the other side, the PBM takes that claim data, sends it off to the employer, bills the employer and then that money flows back to the PBM. This process electronically keeps things moving, but there is only one beneficiary here and that’s the PBM. They shroud their services and costs in mystery so neither party, employers or pharmacies, realize how much money they are losing.
The Impact of PBMs
Pharmacy Benefit Managers profit off of ambiguity and the loss of others. Typically, employers are unaware of what the PBM pays the pharmacy and the pharmacy doesn’t know what the PBM charges the employer. This allows PBMs to charge employers an incredibly high price while they pay pharmacies close to nothing. In fact, about 15% of claims are now in a negative margin which means the pharmacy loses money because they are reimbursed less than the cost of the drug. Pharmacies do not make enough to cover drug costs, much less all of the labor and operational expenses. This has led to the closure of many pharmacies, creating access deserts.
So, employers are being overcharged and pharmacies are being underpaid. Where does the difference go? Straight to the Pharmacy Benefit Managers. They keep charging more and paying out less, which is why they are beating Wall Street’s expectations year in and year out.
Meanwhile, all of this is unbeknownst to both employers and pharmacies. Why? Because
of PBM contracts, which are often non-negotiable and prohibit pharmacies from discussing the amount of money they lose in reimbursement.
How can You Avoid these Unnatural and Unnecessary Costs?
The best way to get around these costs is to not use Pharmacy Benefit Managers in the first place. By partnering directly with local independent pharmacies, employers are able to see an immediate cut of nearly 25 to 30 percent on the costs of services they receive. In addition, pharmacies are able to have a better margin. Therefore, both parties are able to optimize revenue and every bit of expenses that are going out by working together to ensure direct and transparent pricing. Even better, all of the money stays in the community rather than going to corporations.
Tired of All the Money going into PBM Pockets and Out of Yours?
How could you possibly be getting the best value and the best advice by talking to middlemen who make a commission added to every single prescription you buy? Employers Committed to Control Health Insurance Costs is here to provide unbiased and uncensored information to help employers make the best decisions for their employees and their company. We offer a different and better way of doing things because even though using PBMs is the way it’s always been done, does NOT mean it’s the way it should be done.
ECCHIC, is here to help small and mid-sized employers get out of the vicious system PBMs have created. We do so, with our knowledgeable staff who help create direct and transparent contracts between employers and pharmacies.
Give us a call at (314) 997-8865 or contact us via our website HERE.