Another Point of View (To Preceding Post)

I understand that you have very prestigious degrees and that this is a 5 year old post. However, this is why I felt compelled to comment. You should have known to prepare better, and this shouldn’t have been up for this long.

While you may have the “General Concept”, you clearly lack the requisite knowledge to understand the details behind MAC pricing, or any drug pricing logic for that matter.

 

While there are PBMs that spread the plan inappropriately, most of the PBMs that are willing to handle their business this way, end up charging the plan good rates while short changing the pharmacies (their customers are the plans, thus they must be competitive). Let’s back up a bit to “spread” or “traditional pricing”.

PBMs provide services to companies/organizations. These services include but are not limited to: being a regulating body between plans and pharmacies, claims processing centers, customer support, and clinical and/or administrative cost saving program development and administration. These services that save the plans significant amounts of $$$$$. There are very few non-PBM organizations that have the capability or expertise to handle these services (especially in a cost effective manner). So yes, PBMs expect to get paid for these services.

Sometimes this payment comes in the form of spread. However, even with spread, there are always tangible results that prove cost savings to the plans. It makes sense… I’ll get you a better for your member’s benefit and save you money doing so….. In return, I want a portion of the savings. What do you think happens in ANY BUSINESS? You think NYC taxis really cost $2.50 initial engine start +$2.50 per mile to run? No way, but at least you don’t have to make payments, vehicle maintenance, tag, insurance, etc. Contracts that deal in traditional pricing are usually include the PBM performing many other services all at one inclusive cost of “spread”. Usually unlimited claims transactions and prior authorizations are included in this pricing method.

MACs are used as a method to protect plans from paying BRAND drug rates (AWP-16% to -16.5%) for GENERICS (usually aggregately cost around AWP -75 %). This is due to the fact that for the most part, BRAND drugs are priced from the wholesaler at a steady rate of AWP -16.67 to the pharmacy; while generics can vary from one manufacturer to the next. Even different package sizes of the same drug and the same manufacturer could have different unit level pricing from the wholesalers. Tracking the drug costs to ensure that the pharmacies are charging appropriately is seriously a full time endeavor. So much so that 99.9% of all PBMs have at least one FTE to manage only MACs.

Do you think that Joe Schmoe’s Heating and Air or even Bobby Big-Wallet’s law firm are equipped or even desire to manage that process?

Furthermore, as a person that “handles RFPs” you should know that most PBMs have now moved to Pass Through pricing. This pricing method is where: the plan paid amount + the member copay= pharmacy reimbursement. In this pricing method, PBMs still set the pricing (to protect the plan), but they take no spread. Instead, they get all of their profits in the back end via claim fees, prior authorization fees, program setup fees (TSO programs, QL programs, Step Therapy Programs etc), reporting fees, along with other pricing and plan maintenance fees.

Some feel that this is a more transparent spending method for the plan. In reality, there’s not much difference. Either way, the desired result is the same. As you should know, RFPs are intended to show (usually with the plans own claims history via “repricing” methods) that the proposing PBM would have saved them money over their current PBM.

I understand that you have very prestigious degrees and that this is a 5 year old post. However, this is why I felt compelled to comment. You should have known to prepare better, and this shouldn’t have been up for this long.

What are my credentials? For the last 12 years, I’ve been in the PBM business. CSR supervisor, Plan programmer/designer, Prior Authorizations system/program administrator, RFP repricing, claims data analyst, claims adjudication specialist, shared savings proposals, performance guarantees, and MAC pricing Coordinator, are just a few of the titles and responsibilities that I’ve had.

I’m not claiming that everyone does business on the up and up.

“PBMs” aren’t all crooked spreading their plans and pharmacies as a generality either.