Is Low Bid Always The Best Bid?

The science of how to compete against “low bid” is a discipline learned by losing. Over time a seasoned salesman will learn how to beat the “low bid” and win more than he loses.(How To Win Against A Competitor’s Low-Ball Price Bid – Forbes)…………….In the article that follows the “high bidder” who lost to the “low bidder” is protesting. Is the $700,000,000 savings really true……………….? Common sense dictates otherwise.

By Tyron Squires, MBA

After evaluating the proposals received, the South Carolina Public Employee Benefit Authority posted its intent to award, on April 21, 2015, their PBM services contract to Express Scripts, Inc. (ESI). On May 1, 2015, Catamaran timely filed a protest. Here are the bids that were submitted by each finalist.

Bids

Catamaran – $2.83B
MedImpact – $2.86B
Express Scripts – $2.15B

Bids are evaluated by very smart people, who do not necessarily have a trained eye for evaluating PBM proposals or contracts. The logic is often, “the largest PBMs offer the best pricing.” The logic is sound but what actually unfolds can be far different from initial estimates. Maybe the ESI bid is accurate but experience tells me otherwise. $700 million left on the table I don’t think so!

The relationship between a plan sponsor and PBM should be based upon verification not trust. Furthermore, trust is good but isn’t control better? PBMs will provide transparency and disclosure to a level demanded by the competitive market and generally rely on the demands of prospective clients for disclosure in negotiating their contracts.

Assessing transparency is more effectively done by a trained eye with personal knowledge of the purchaser’s benefit and disclosure goals. There is only one course in the world which offers a formal setting specifically designed to train those eager to become better stewards of the pharmacy benefit.

That course is the Certified Pharmacy Benefits Specialisteducation program and is accredited by the University of Kentucky College of Pharamcy. Check with your employer about sponsoring your participation.

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