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Employers Health Pharmacy Benefits FAQ

November 28, 2023 by Emily Clevenger

What is a health care group purchasing collective?

The concept of group purchasing for health care simply leverages a group of organizations’ collective size to improve the cost, quality and access of the benefits employers are already purchasing. The core mission is to help clients maximize the value of the benefits they provide employees.

What makes Employers Health different?

Employers Health has been group purchasing for pharmacy benefits for more than 25 years, making it one of the longest-running programs in the industry. With no owners or external shareholders, we are governed by a client-based board of directors and are committed to our clients’ success and aligning our interests accordingly. Employers Health provides a robust support model that ensures a first-rate experience for both clients and their participants.

What are the other benefits of joining a health care group purchasing collective?

Clients of Employers Health join more than 350 employers and plan sponsors who are all working together to reduce health care costs. In addition to numerous no-cost networking opportunities, you’ll have access to a team of clinicians, attorneys and pharmacy benefits experts to assist you. Whether it’s reviewing plan performance, solving an issue or keeping you updated on the latest industry news, you and your organization will have the support of a team of trusted benefits professionals who advocate on your behalf.

Who does Employers Health work with?

Employers Health works with self-insured employers, TPAs and risk pools throughout the United States. Clients range from organizations with 1,500 to over 50,000 employees and represent a variety of industries from retail to logistics, manufacturing, education and financial services.

Our typical contacts are human resources and benefits teams, but we frequently work with members of the c-suite to ensure all decision makers are informed on the latest in pharmacy benefits. Additionally, our team members work closely with employee benefits consultants and advisors, serving as an added resource to help your organization achieve its goals.


What is a PBM?

PBM stands for Pharmacy Benefit Manager. The three largest PBMs are CVS Caremark, Express Scripts and Optum Rx. Other PBMs include Humana Pharmacy Solutions, Prime Therapeutics, MedImpact Healthcare Systems and more. PBMs serve as an intermediary between pharmaceutical manufacturers and payers.

What does a PBM do?

Put simply, PBMs manage a prescription drug plan by ultimately processing and paying prescription drug claims on behalf of pharmacy benefit plan sponsors. PBMs are responsible for negotiating drug pricing with manufacturers, developing formularies, utilization management, contracting for a pharmacy network, processing claims and more. They work with health plans, employers and other plan sponsors to ensure plan participants obtain the right drug, at the right price and the right time.

What is a PBM Market Check?

In the context of pharmacy benefit management, contracts and changing circumstances are so common that contract renegotiation to address these issues has its own term of art – “Market Check”. At its core, a market check provision allows the client of the PBM to renegotiate pricing with the PBM at some level of frequency. This frequency can vary across the industry, but the more often one is able to conduct a market check the better.

Employers Health conducts its market check annually on a calendar-year basis because it best coincides with the decision-making process for our clients and prospective clients. Essentially, the Employers Health market check can be described as an annual contract renegotiation. Employers Health’s negotiation of the market check improvement is based on market dynamics rather than some pre-determined formula. In this way, the Employers Health market check ensures its clients and prospective clients enjoy competitive pricing throughout their participation in the PBM program.

How should PBM performance be evaluated?

The combination of price and utilization drives total pharmacy costs. On the price side, administrative fees are typically less significant while discounts, maximum allowable cost (MAC) pricing, dispensing fees and manufacturer rebates have more impactful contributions to total costs. Hence, any pricing evaluation must consider each of these pricing components and how they are applied to a plan’s utilization.  On the utilization side, plan sponsors must evaluate which PBM offers the level of management that most appropriately balances the desire for plan savings with the tolerance for participant disruption.

It’s important for plan sponsors to work with independent, objective consultants to evaluate their PBM contracts.  There are a variety of contractual gimmicks employed by PBMs to make their pricing offers look advantageous, and it takes a savvy consultant to identify and account for those.  Under rare circumstances should a plan sponsor with a fiduciary responsibility allow its consultant that is providing expert advice also sell the plan sponsor a proprietary solution it has with a PBM.  This would be a conflict of interest and risk the plan sponsor’s ability to act as a fiduciary.

If you have additional questions about group purchasing for pharmacy benefits or would like to hear more about how your organization can reduce health care costs, please contact a member of our team.

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