Plan sponsors’ prescription drug costs continue to increase year over year and remain as one of the fastest-growing components of the healthcare dollar. One of the most important ways plan sponsors can lower healthcare costs without significantly changing their benefits is to look for opportunities to improve their pharmacy benefit manager (PBM) contracts.
The success of the plan’s pharmacy benefit depends on effective contracting. PBM negotiations typically involve a number of contractual provisions, which are critical to delivering competitive pharmacy benefits on a cost-effective basis. This paper by Milliman’s Greg Callahan and Brian Anderson explores a few important PBM strategies that can be used to reduce costs and quickly evaluate whether a current or new PBM contract is effectively managed.
The primary purpose of the pharmacy benefit managers (PBM) is to serve as an intermediary among pharmacies, drug manufacturers, and payers. PBMs manage formularies, negotiate discounts and rebates, and process and pay prescription drug claims through a web of electronic transactions.
Blockchain could potentially transform the relationship between payers, pharmaceutical manufacturers, wholesalers, and pharmacies by offering an alternative, transparent mechanism for processing, pricing, and validating prescription transactions. This approach could lead to less waste, reduced pricing variations between pharmacies, and a better app-based purchasing experience for consumers, through transparency of the true cost of prescription drugs.
Milliman consultants Brian Anderson, Gregory Callahan, and Michael DiPrima provide more perspective in their article “How blockchain technology will disrupt the PBM-payer-pharmacy relationship.”