The cost of healthcare is going up for large employers and their employees by an estimated 5% for 2021. Even though plan sponsors continue to shoulder a generous 70% of the cost per employee, rising prices—particularly in the pharmacy segment—mean that the out-of-pocket spending burden for employees won’t get any easier to manage this year.
One impact will be continued difficulty for some workers when it comes to affording prescription medications. For instance, those who have high deductibles can often face paying list price at the point of sale for a medication. Others who are in plans with aggressive pharmacy cost-sharing must cover high co-pays or co-insurance that leave needed medications out of reach.
As a third-party administrator (TPA), there is a value-added option you can offer that you may not have seriously considered before. A prescription discount program can act as a “safety net” that supplements the pharmacy benefit and protects members from list price, even if they face a high deductible or aggressive cost-sharing. Prescription discount programs carry low front-end costs, and they can generate revenue while they give employee-members access to PBM-negotiated discounts on most medications. For more detail on the advantages that a program like this can bring, download our "Prescription Discount Programs for Third Party Administrators" fact sheet.
Once you have made the decision to implement a prescription discount, you’ll need to choose a pharmacy benefit management partner (PBM) to administer the program. On the surface, it sounds simple enough. Just find someone who can achieve the most competitive discounts. But, there is more to consider. Your results depend on how your PBM partner works with you. Are they truly working for your best interests? Could they be competing with you? What, then, should a TPA look for in a prescription discount program partner? Below, we outline four considerations that will help you make the right decision:
- Look for a high-volume PBM with extensive nationwide pharmacy networks that include all the major chains.
A PBM looks to negotiate the best discount from pharmacies. Some PBMs do a better job of this than others. The size of the PBM, its market share and how much business it will direct to the pharmacy are all important factors in the final discount. There are approximately 65,000 pharmacies in the US, with several major national chains. Only those PBMs that contract with nearly all of them, including specialty pharmacies, can offer the most competitive pricing choices.
Further, a PBM that is working with more pharmacies and at higher volumes can offer additional advantages, like shorter payment cycles. Smaller PBMs have to invoice pharmacies and wait for remittance, meaning you only get paid after they get paid. If cash flow is important to you, look for a PBM partner that commits to weekly payment cycles.
- Choose a channel-agnostic PBM—one that is not affiliated in any way with a particular channel—to offer the most transparency.
Consumers are scrutinizing prescription costs more than ever and demanding real transparency. Discount drug cards (DDCs) need to deliver as many options as possible through all of the available channels to support this demand. If your PBM is invested in the success of a chain of brick-and-mortar stores or a mail-order business, are you certain that your customers aren’t being steered toward those channels? To help ensure that your PBM prioritizes your best interests, work with a partner that is channel-agnostic, one whose focus is to provide the most competitive discounts to your customers as opposed to driving traffic into their channel.
- Look for a PBM that shares pricing data with you for full transparency.
Pass-through pricing is another side to the transparency issue that impacts your business results. Some PBMs will agree to pay you a set price per claim, but you don’t have line-of-sight into what they are keeping for themselves. In situations like these, you are at risk of getting short-changed financially—there is no way to really know. Full price transparency can be critical for your success in the competitive world of drug discount cards.
- Look for a PBM that does not offer its own branded DDC.
Many PBMs market their own branded DDCs. They offer the same discounts through the same channels to the same people you are trying to reach, and are competing with you directly. In this scenario, the PBM knows exactly who your customers are and can market to them. Avoid paving the way for the competition to poach your customers. Your members are your members.
With SS&C Health’s Prescription Discount Program, members have immediate access to our 63,000-pharmacy nationwide network, highly competitive negotiated discounts, and a channel-agnostic business model. Because of our high claims volumes, our clients receive payments weekly. We share all of our pricing data with you for full transparency, and we do not market our own branded program. Download our "Prescription Discount Programs for Third Party Administrators" fact sheet to learn more about how our Prescription Discount Program can serve as a value-added “safety net” offering that offers advantages to TPA clients and helps their employees afford medications.
Written by Michelle Emmanuel-Johnson
Director, Client Services