Magazine article Workforce Management

Employers Seek Disclosure of Costs, Rebates

Magazine article Workforce Management

Employers Seek Disclosure of Costs, Rebates

Article excerpt

Pharmacy benefit managers

PRESSURE IS MOUNTING on pharmacy benefit managers to reveal what they pay for drugs and to pass on the rebates that they receive to employers.

Last month, the HR Policy Association's Pharmaceutical Purchasing Coalition, a group of 52 large employers who collectively spent $3.7 billion on drugs in 2003, established a new transparent pricing platform. The coalition includes such employers as Caterpillar, Starbucks and IBM.

In May, the coalition commissioned Hewitt Associates to issue a request for proposals for pharmacy benefit managers. In order to be certified by the coalition, pharmacy benefit managers had to agree to seven requirements. These included charging employers the same amount that the pharmacy benefit managers pay for drugs, disclosing acquisition costs and passing on to employers the rebates and discounts that the pharmacy benefit managers receive from the drug manufacturers.

The employers in the coalition are bound by contracts with their current pharmacy benefit managers. But once these contracts are up for renewal, the idea is that the employers will discuss discontinuing business with vendors if they do not meet the requirements, says Marisa Milton, a spokeswoman for the HR Policy Association. Out of the 27 who started the bidding process, only three completed it: Aetna Pharmacy Management, Medlmpact Healthcare Systems and Walgreens Initiatives.

This is going to cause many employers-including those that aren't in the coalition-to ask their pharmacy benefit managers why they didn't agree to the conditions, says Mike Desldn, president of the Pharmacy Benefits Management Institute, a research organization in Tempe, Arizona. Also, he adds, the threat of the 52 coalition members refusing to do business with those companies that don't follow the requirements may weigh on the pharmacy benefit managers that did not get certified. It remains to be seen whether the employers will follow through with this threat, he says.

Phil Blando, a spokesman for the Pharmaceutical Care Management Association, says setting standards for contracts is not necessarily in the best interest of employers because each company has its own unique needs. "We are adamantly opposed to locking in place a one-size-fits-all approach to disclosure," he says. …

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