Q: There are so many changes happening in the regulatory arena regarding pharmacy and pharmacy benefits including enhanced transparency and audit rights. What opportunities should we be considering?
In a time when the PBM industry is continuously scrutinized for its lack of transparency, rising prescription drug costs, and long-standing practices that affect plan sponsors and patients, reforms from the Department of Labor and updates to the Consolidated Appropriations Act are emerging rapidly. Transparency has become the new direction and mantra for the industry.
Below are several key PBM contract areas that will be more accessible and auditable under the evolving rules:
- Visibility into how drugs are priced
- Revenue streams and compensation disclosure
- Visibility into rebate amounts and pass-through compliance
- Insight into pharmacy payment practices
Q: With this in mind, how do we ensure our PBM contract is performing as promised?
Start with the basics. The goal of a PBM audit is to verify that contractual discounts, fees, and rebate guarantees are being upheld. With Rx spending representing a higher portion of overall health care costs, it is important that employers hold their PBMs accountable for meeting contractual obligations related to all financial guarantees. Now that the current environment is pushing for better oversight and compliance, initiating an audit can deliver value on a variety of concerns. These include financial integrity, hidden revenue streams, rebate retention, pricing manipulation, performance concerns, non-competitive pricing, and errors in benefit set-up, among others.
Q: How does a Rx audit bring value to the financial contract and deliver on member care?
Did you know that PBM audits can support both cost control and patient access to medications? Recoveries from shortfalls on contract guarantees or missed rebate recoveries can be returned to the Plan, plus ensure contract integrity. Audits can serve not only as governance and due diligence on a large health care cost item, but also support positive changes across PBM vendor selection, negotiations, plan coverage, and performance guarantees. A plan design and drug coverage audit is a notable example of an increasing concern. It is not unusual to find drug exclusions coded incorrectly by the vendor, and therefore covered by the Plan. Examples include over-the-counter medications and the popular GLP-1 medications for weight loss, including Wegovy and Zepbound. Without plan set-up audits, employers could be providing coverage and spending thousands of dollars on medications assumed to be excluded from the Plan.
Q: What is the right cadence for PBM audits?
Recommendations include auditing the PBM contract and financial terms annually, but not less than once every term of the contract, which is typically three years. No industry or organization is immune to the need to assess transparency, perform due diligence, and enhance financial awareness regarding such a large health care expenditure.
This response was provided courtesy of Connie Perry, PharmD, Chief Pharmacy Officer, Partner, Ethica Pharmacy Advisors.
