PBM 101: How can I save my company money?
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Promote the use of generic medication where possible.
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Although the utilization of generic may seem obvious in saving a payer money, there are some things to be considered.
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ONE | MAC: Make certain your PBM utilizes a well designed and consistent MAC (Maximum allowable Cost) at both mail and retail.
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TWO | Costs: Generic does not automatically mean it will cost less. Make certain you have considered the costs associated with the medication.
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Two recent examples of costs associated with generic and non-generic prescriptions can be seen with the blockbuster drugs Prilosec and Zocor. For the first 9 to 12 months after the product went generic, we did not see a significant savings. It often takes a year before the price of the generic drug is significantly less than the brand name.
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Consider a transparent pass thru (TPT) PBM partner. Traditional PBM companies make money AT LEAST three ways - rebates, network spread, and mail service prescriptions filled at the PBM's mail order pharmacy.
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Two recent examples of costs associated with generic and non-generic medication can be seen with the blockbuster drugs, Prilosec and Zocor drugs. For the first 9 to 12 months after a product goes generic, there may not be significant savings. It often takes this long for the price of the generic to be significantly less than the brand name.
TPT PBMs single source of revenue is the administration fee. Although these fees can be in excess of $ 2.00 per claim, where traditional PBMs may only charge between $ 0 and $ 0.25 per claim, one may find better alignment with the PBM and payer?s goals.
The TPT PBM has no incentive to increase the number of prescriptions that have rebates, charges only what the retail provider bills, and doesn?t usually have a mail order facility.
Good benefit design, as shown in the mail order example, can definitely save a payer money. A well designed Pharmacy Benefit plan focuses on areas of high cost, proper member co-payment/incentives, and has a well thought out formulary or preferred drug list.
Pharmaceutical products can be very cost effective, but there can be tremendous differences in price for products that all effectively treat a condition.
EXAMPLE: Gastro-Esphageal Reflux Disease (GERD). Products most typically prescribed for this condition are called Proton Pump Inhibitors (PPIs). As of October 5, 2009, the average wholesale price numbers or generic MAC (Maximum Allowable Cost) for the products in this category:
$ 6.45 Nexium 40 mg AWP
$6.19 Prilosec 20 mg AWP
$0.85 Omeprazole 20 mg (Generic for Prilosec) MAC
$4.99 Protonix 40 mg AWP
$71.3 Aciphex 20 mg AWP
$ 5.27 Nexium 20 mg AWP
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