Magazine article Drug Topics

More Health Plans Question PBMs' Effectiveness

Magazine article Drug Topics

More Health Plans Question PBMs' Effectiveness

Article excerpt

In an effort to control their escalating prescription costs, some payers that currently use pharmacy benefit managers are considering switching from an outside PBM to an in-house one or not using a PBM at all.

One group that is mulling this strategy is the Southern Coalition, which includes representatives of the state governments of Alabama, Arkansas, Georgia, Louisiana, Maryland, North Carolina, South Carolina, and West Virginia.

"They are raising the question as to whether they are getting the best deal out of their PBMs," said Richard Stevens, executive director of the West Virginia Pharmacists Association. This initiative began because the cost of prescriptions for public employees has risen from 18% to 25% for the last several years, he added.

While the Southern Coalition is discussing working as a single purchasing group with two PBMs-Merck Medco and Express Scripts-it is also exploring the notion of creating its own PBM. One of the questions raised was that preferred formularies often contain the pharmaceutical products that pay the highest rebate to the PBMs. For instance, if a PBM contracts with a pharmaceutical company for a large rebate on a particular drug, the PBM may place that drug on its preferred formulary even though another drug, which pays no rebate, would cost less.

Another state that has concerns about PBMs is Missouri. As part of the state budget, the governor favored using a PBM to manage the Medicaid prescription benefit. By lobbying the state legislature, the Missouri Pharmacy Association managed to get a bill passed that prohibits the use of a PBM by the state for Medicaid patients for this fiscal year.

Elsewhere, in the Northwestern states, a group of managed care companies are planning to manage their own pharmacy benefits. Three years ago, Regence Blue Shield of Idaho internalized its PBM operations, effectively doubling its rebate per prescription. …

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