It’s always important to be sure you are comparing apples to apples when analyzing contracts. Because this can be especially difficult in complex PBM contracts, we’ve detailed some of the common misses that can be costly for an employer and their consultant when evaluating a PBM contract.

• Be sure you’re comparing the same types of formularies. A standard formulary may include drug exclusions or prior authorizations and step therapies that ultimately drive utilization to the same preferred therapy. Just because a formulary doesn’t have exclusions doesn’t mean it’s “open.”
• PBMs have begun adopting strategies that prefer certain brand drugs over the generic equivalent. The brand drug may have a lower net price to the plan after the application of rebates, but it will also mean higher prices to the plan at the point-of-sale. How does your financial model account for these higher starting prices?
• Be cautious of low-value drugs put on formularies by PBMs to inflate rebate amounts. In these instances, a plan may attain higher rebate levels, but also pay more at the point-of-sale for the higher list price drugs.
• PBMs typically exclude limited distribution drugs (LDDs) from rebate guarantees, artificially inflating their value. Understanding a PBM’s LDD list, and ensuring it’s being applied appropriately to a plan’s utilization, is key to an accurate analysis.
• When evaluating a plan’s specialty drug list, watch to see if certain drugs, like those treating HIV, are included in the specialty guarantees and apply the appropriate pricing.
• Make sure the contract is clear about which claims qualify for the specialty drug rebate guarantee and which do not. Are there other requirements to qualify for the full value of the rebate guarantee, such as a days’ supply threshold or that the plan has incurred some cost because of the claim?
• Finally, be sure clinical management or coupon savings aren’t included in rebate guarantees, as they can increase rebate amounts.