By Bill Rusteberg
PBM Agreements are Contracts of Adhesion and it’s nearly impossible to negotiate contract language and terms. “Take it or leave it!” says the PBM. “We have enough fools accepting these contract terms so go pound sand if you don’t like it!”
We read another PBM Agreement today. Same old stuff. Any plan sponsor signing this would have to be out of their mind. But invariably they do.
Most plan sponsors never read their contracts. They rely on their insurance broker to do that for them. Problem is they don’t read them either.
Operating under the philosophy “We do what others don’t,” we read contracts. We’ve done so much of that over the years we can usually predict with uncanny accuracy what a contract contains before reading it. It’s like magic!
Alas most plan sponsors operate under the time-honored Pelosi Doctrine: “You have to approve the contract first so that you can find out what is in it”
Here are a few quotes we found in today’s contract reading exercise:
“This is a pass-through contract! We don’t make any money other than the per script fee you pay us………….As long as you use our formulary. If you change our standard formulary our fees will be subject to change to make up for lost revenue. “
“We operate under the philosophy of ‘Don’t Ask Don’t Tell.’ Our Maximum Allowed Cost (MAC) pricing is what we decide it is on any given day dependent upon the movement of the stars and the Moon. MAC prices are proprietary, and we won’t ever tell you what they are so give it up OK. 99% of claims are at MAC pricing so forget about Exhibit A where we show all those great but meaningless discounts off AWP pricing. “
“Oh, by the way, where we said we don’t own a specialty pharmacy on page 32, well we kind of fibbed about that a little bit. We are both subsidiaries of the same company which makes up our Three-card Monte.”
“We may pay commissions to a General Agent in connection with this Agreement but we will never report it. Ask your broker and he might tell you. He’d be an idiot if he did. In addition, we will pay your TPA commissions too which we disguise as a Coordination Fee which, you will notice, is clearly stated in this Agreement. Granted, it’s hard to notice if you don’t read the Agreement.”
“We must be your exclusive source of prescription drugs. If you find a better price somewhere else you can’t buy it.”
“This Agreement shall be in force for three years and will renew for two consecutive two-year terms. You can’t terminate this Agreement unless you give us written notice in triplicate between the hours of 2:00 am to 2:30 am Greenwich Time no earlier than one day before the renewal date which must fall on a Sunday.“
“Upon termination you agree to have us administer run off claims for a period of one year at a minimum monthly administration fee shown in Exhibit A. And don’t tell us you have a problem with this at termination because your signature on page 43 says you have accepted all the terms and conditions we will, and have, imposed upon you under the color of law.”
Well……….we kind of fibbed just a little bit too. These are not actual quotes…………….
“Judge, did you read the contact before you signed it?“ I asked during a Commissioners Court meeting. “Yes, of course I did!” huffed the Judge. “Then why did you sign it?” I replied.
