Skip to the main content.
Featured Image
BLOG. 3 min read

Is Your PBM Competing With You?

The past few years have been full of upheaval in the healthcare industry with mergers and acquisitions involving pharmacy benefit management (PBM) companies. In 2015, UnitedHealth Group acquired Catamaran and merged it with its existing PBM company, OptumRx. In 2018, Cigna acquired the largest PBM in the US: Express Scripts. CVS Health, the largest pharmacy chain and second-largest PBM, acquired Aetna, and the trend continues with Anthem planning to launch a new PBM in 2020.

The PBMs in these deals intend to sell both these and other services to health plans while at the same time competing with them on both an Administrative Services Only (ASO) and insured basis with their health plan offerings. Given this approach, health plans of all sizes – small plans, mid-tier plans, regional plans, integrated delivery networks, even larger plans not involved in these deals – may feel uneasy about working with a PBM affiliated with one of their competitors.

And rightly so.

With these deals in place, pharmacy benefit management services are embedded within large organizations that are inherently positioned to compete with the health plans they seek to serve as clients.

If your health plan has a business relationship with one of these health plan/PBM entities, you may be feeling wary – wondering if the members these new large entities seek to attract into their health plans are the same members your health plan currently serves. Here are some logical questions:

  • Will the health plan/PBM prioritize the service and resource needs of members in their own health plan over the needs of members in your plan?
  • Will they prioritize their need to remain cost-effective over your need to remain cost-effective?
  • Will any business you award the health plan/PBM provide them with scale and additional revenue that allows them to more effectively attract members into their plan over yours?

Transparency is essential

The pharmacy supply chain has always been complex. Even independent PBMs may derive income from spread pricing, network fees, administrative and clinical services, drug rebates, discounts, or through revenue captured through PBM-owned channels in the supply chain (such as mail order, specialty/infusion, and retail pharmacies). Due to this complexity, transparency is essential for health plans to understand the cost and revenue streams for all parties in the arrangement. Without clear visibility, any PBM could conceal sources of income. The lack of transparency, while it has always been a challenge, is now complicated by the fact the larger health plan/PBM could prioritize their business goals over the goals of their smaller health plan clients while competing with them in virtually every revenue stream. As a result, it may be difficult for health plans to assess if their PBM is competing with them or driving value and accomplishing important objectives for customer experience, clinical quality, and cost management.

An independent alternative puts your interests first

Large health plan/PBM combined entities would like all health plans to think there is no choice but to work with the larger organization to achieve scale. But there is an obvious internal conflict in this approach since these large plans have revenue and cost-saving imperatives to meet that could at times override the revenue and cost-saving needs of their clients.

We believe that there is an independent alternative that looks to create value through transparency and more effective use of technology to help realize and act on better choices to lower costs. By having that alternative, a health plan should never have to obtain services from an organization that has to compete and potentially conflicting interests. You need assurance that your strategy comes first. You need a pharmacy solutions provider who can help you create a future where you are attracting and retaining members while providing high quality and cost-competitive medical and pharmacy services, so you can successfully compete in a rapidly changing value-centered healthcare environment.

We offer deep operational and regulatory expertise, transparency in the pricing of our services, a broad customer base to help you achieve scale and obtain competitive pricing, and the full suite of technology solutions you need to integrate the medical and pharmacy benefit to help achieve value with optimized health outcomes. We are one of the largest independent providers of pharmacy services. This independence means that your success is really our priority.

Related articles

Value-Based Payment: A Five-Step Makeover for Health Plans
BLOGS. February 27, 2019

Value-Based Payment: A Five-Step Makeover for Health Plans

Read more
Time to Commit to Reconciliation of Your Encounter Data Submissions
BLOGS. June 11, 2019

Time to Commit to Reconciliation of Your Encounter Data Submissions

Read more
Drug Discount Cards as A Strategy to Support Small Employers
BLOGS. August 29, 2019

Drug Discount Cards as A Strategy to Support Small Employers

Read more