2020 // Issue 2
Consultant Connections is a quarterly newsletter, specifically for employee benefit 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.
As we are all acutely aware, 2020 has brought its share of challenges to all aspects of everyday life. I hope that each of you has been able to adapt to the “new normal” and find a routine that meets you and your families’ needs. Our friends, colleagues, clients and their families along the gulf coast impacted by hurricanes are especially in our thoughts as an already tough situation is compounded exponentially by the destruction of property, basic needs like electricity and running water and life itself.
Amid these challenges, the team at Employers Health is here to help! While helping employers and plan sponsors has always been at the core of our mission, today’s challenges have shone a bright light on the work of our team in delivering value to our clients. This value is expressed best by the following results:
- We’ve added more than $270 million in new pharmacy spend to our program year-to-date and expect even more growth by the time this year’s selling season concludes.
- We’ve retained more than 98% of our existing business, much of it through competitive RFP evaluations.
- We’ve achieved our highest overall satisfaction score in our Client Survey, scoring a 4.75 out of 5.
In a year when clients need savings now and can’t wait until another RFP process to get a better deal, they’re comforted to know that they are in a contract that ensures the most competitive pricing year-in and year-out. Couple that with ongoing utilization management solutions and an emphasis on delivering an exceptional participant experience, and you can see why so many consultants are recommending their clients participate with Employers Health.
Thank you for your trust in our solution and our team – we look forward to delivering on our promises!
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![]() Michael Stull, MBA Chief Strategy Officer |
Mid-Year Plan Results
It is hard to believe we already have midyear plan results to share. While many of these statistics may not be surprising, you will see some changes in both utilization and utilizers due to COVID-19. Not surprisingly, we saw a decrease in retail prescriptions of 3.6% along with a nearly matching increase in mail order prescriptions of 3.7%. Days’ supply per member per month (PMPM) also increased 1.5%, likely a result of utilizers shifting to 90-day prescriptions in order to decrease exposure to COVID-19.
Gross Cost (Less Rebates) PMPM
$88.00
Specialty Total Gross Cost PMPM
$59.40
Generic Dispensing Rate (GDR)
87.8%
Average Plan Participant Age
36
Generic Price Inflation
0.7%
Brand Price Inflation
12.2%
Pricing Caveats
The Not So Good, the Bad and the Ugly
Most good stories need a villain. In today’s pharmacy benefit industry, PBM and health plan contracts have become a villain for many stakeholders. A lack of transparency, confusing contract language and more elaborate pricing games are contributors. When PBMs and health plans are competing for business, they recognize and adapt to the way their deals are evaluated in the marketplace. PBMs create pricing caveats so their financial proposals look greater, which also makes it easier for the PBM or health plan to hit its proposed pricing guarantees. These contractual maneuvers distort a contract’s true value and oftentimes don’t meet the expected financial results. When one PBM gets away with contract caveats, others will follow.
Here’s the good news: many of these contractual maneuvers and pricing caveats can be identified, can be better negotiated in favor of plan sponsors and can achieve better overall costs. So, what are the common contracting games advisors can expect to see? And what are some new or developing contracting caveats that we are seeing in the marketplace?
Common Caveats
New Caveats
What’s it all mean?
There are many more of these contracting caveats, but these are some of the most common and they can make a real impact in financial projections and analyses. In our 20+ years’ experience working in the PBM space, we believe the opportunity to improve overall PBM value to employers is 85% contracting and 15% clinical management. If the pharmacy arrangement has underperformed expectations, there is a strong chance contracting caveats are a significant contributor. If utilization hasn’t shifted dramatically and if appropriate clinical programs are in place, the caveats in this article should be examined.
At Employers Health, we understand the frustration for advisors and plan sponsors to discover some of these contracting issues. However, purchasers need to stop rewarding bad contract behavior with renewals. Vendor changes can seem daunting, but employers are leaving money on the table when they let incumbents get away with subpar PBM contracts. We are hyper focused on negotiating contract value because we know how it can impact the long-term performance and cost to our coalition clients. Unlike some pundits in the market who preach about changing the entire PBM system but find little to no actionable solutions, Employers Health has developed a contracting strategy to better purchase PBM services today.
A PBM contract can be the villain, but it doesn’t have to be. That’s the story we’re writing at Employers Health.
Eric Dublikar, MBA, Vice President, Business Development (East)