2022 // Issue 1

Consultant Connections is a quarterly newsletter, specifically for employee benefit and health and welfare consultants, dedicated to providing details and data needed to help employer clients maintain high-quality care for their plan participants while keeping prescription drug and related health care costs sustainable.

From Mike

Happy Summer!

Our annual market check negotiations are wrapping up with each of our three PBMs and I look forward to including these improvements in our bid responses for new and renewing business. I’m appreciative of the work that our SVP of PBM Contracting and Strategy, Dave Uldricks, J.D., leads and the many team members who contribute to the process. Their knowledge and dedication provide us with a solid contract and industry-leading pricing to further strengthen the purchasing power of the coalition and its clients. With all the consolidation happening in the industry, our collaborative model continues to gain more and more momentum!

We held our annual Pharmacy Benefit Conference in Columbus, OH in March. It felt great being back in person, and the lineup of speakers was awesome. Topics for the day included biosimilars, gene therapies, new and emerging weight loss medications and federal and state legislative initiatives. The sessions are available on demand and you can register on our website.

At the time of writing, we’ve crossed the $100 million mark in new pharmacy spend awarded to Employers Health. We are excited for the more than 100 opportunities that are still being evaluated. Thank you to the many consultants who provide us these opportunities to serve your clients!

My very best for a healthy and productive second half of 2022!

Michael Stull
Chief Strategy Officer

PBM Pricing Games Checklist

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.

Current Employers Health Book-of-Business Stats

Through March 31, 2022

Total Net Spend PMPM $101.02 (after rebates)

Generic Dispensing Rate84.2%(inclusive of COVID-19 vaccines and DAW9)
Specialty Drug PMPM$69.16