Build Your Own RX Plan – Bypass Predatory Business Models (PBMs)

“Don’t bother doing something unless your radically different from the competition”– Richard Branson

By Bill Rusteberg

Building a Rx benefit plan without a PBM (Predatory Business Model) is beginning to make sense for plan sponsors whose Rx costs are as high as 50% of total plan spend. They no longer view their plan as a health plan but as a Rx plan with health benefits attached.

What they have discovered is that reigning in the high cost of prescription drugs is based on two things – sourcing and plan member financing.


There are numerous discount drug programs such as ones offered through Walmart and H-E-B. Both have a list of hundreds of drugs costing $4 for a 30 day supply. Why need a PBM to be involved at all for drugs costing $4? In these instances the PBM fee per fill charge is more than the cost of the drug.

Another source are retail pharmacies active in wholesale mail order like Marley Pharmacy in North Carolina which offers extremely competitive pricing. Then there is Canadian drug sourcing with price savings as much as 80% and more.

Specialty drug sourcing may be achieved through manufacturer assistance programs and international sourcing.


As a reminder, insurance is a reimbursement benefit for insureds.

  • A covered benefit expense isn’t reimbursed until it’s used.
  • Insurance indemnifies the insured and no one else.
  • It is the member’s responsibility to pay for services whether they have insurance or not.
  • Insurance indemnifies the member only upon proof of loss.

However consumers view insurance differently. As a convenience to plan members plan sponsors front much of the cost of prescriptions at the point of service. This is a great benefit because many plan members cannot afford to pay for high cost medication to be reimbursed at some point in the future. Many Americans are living from paycheck to paycheck.

Plan sponsors can provide post service financing in partnership with the sourcing entity on a net-30 basis. That’s not a hurdle too hard to overcome. Patients receive their prescription after paying a co-pay (or no co-pay at all), the source bills the plan sponsor for the difference.

A plan may set a threshold before reimbursement is eligible. For example, a plan may set any prescription costing less than $20 as non-reimbursable through plan assets. This eliminates the need for “insurance” for discount programs like Walmart and HEB $4 drug program and other low cost, easily affordable prescriptions.

Almost every health plan on the planet utilizes a PBM just like every plan in the universe uses a PPO network. A plan without either is thought to be impossible. It’s not.

Over a decade ago we moved our first client away from the managed care (PPO) world to a Reference Based Pricing model. We were told it would never work. “Hospitals will refuse to see your members” or “Doctors won’t take your insurance” or “Balance billing will ruin member’s credit for life” was commonly heard. BUCA reps. and their hospital partners rallied against the model scaring plan sponsors into submission. Fellow brokers wouldn’t touch Reference Based Pricing with a ten foot pole. Fast forward to today and we see Reference Based Pricing plans cropping up all over the fruited plains.

The same will hold true for plan-sponsor-built Rx plans. Fasten your seatbelts.

Business is about solving other people’s problems. Solving the high cost of healthcare giving employers a competitive advantage is ours. Status quo convergent thinking solves problems through a very narrow lens. Divergent thinking empowers us to solve problems with a wide lens allowing us to see what others don’t. You can’t fix what you don’t see. You don’t know what you don’t know. We see opportunities others miss. We do what others don’t. Winning together is our goal. is a specialty company in the benefits market that, while not an insurance company, works directly with health entities, medical providers, and businesses to identify and develop cost effective benefits packages, emphasizing transparency and fairness in direct reimbursement compensation methods. The shared vision of and clients who retain our services is to establish and maintain a comprehensive employee health and welfare plan, identify cost areas that may be improved without cost shifting to any significant degree, and ensure a superior and sustained partnership with a claim administrator responsive to members needs on a level consistent with prudent business practices.Plan costs, in all areas including fixed expenses and claims are open for review on a continuing basis. Cost effective plan administration and equitable benefit payment to providers are paramount to fulfilling our mutual fiduciary duties. As we proactively monitor and manage an entire benefit program we are open to any suggestions members may make or the dynamic health benefit market may warrant in order to accomplish these goals. Duty of loyalty to our clients, transparency and accountability are essential to the foundation of our services. To that end, we expect our clients to realize a substantial savings based upon the services that we will deliver.

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