Modern PBM
Alan Pannier
Key Takeaways
Big 3 PBMs use thousands of MAC lists to charge different prices for the same drug based on client size.
If a 4.8M-member insurer like Blue Shield can't get fair PBM pricing, smaller employers almost certainly can't either.
Self-insured employers of any size can now unbundle pharmacy benefits and bypass the Big 3 entirely.
The Big 3 PBMs manage thousands of “MAC lists”, enabling them to charge different prices for the same drug across their business books. They use these MAC lists to give better pricing to their largest clients while making up the difference by charging their small clients more. This is an interesting fact to keep in mind when reading this month’s announcement that Blue Cross Blue Shield of California is moving away from the Big 3 PBMs in order to get a fair deal. If Blue Shield of California, with 4.8m managed member lives, can’t manage to get a good deal from the Big 3, how can a typical self-insured employer with a few hundred or a few thousand member lives expect to be treated fairly?
If your self-insured business is working with a Big 3 PBM, you can be nearly certain that your pricing is significantly worse than whatever the big PBMs were offering to the giant Blue Shield. The Big 3 deal wasn’t good enough for Blue Shield, and it isn’t good enough for your business either. Even the large broker coalitions that offer the window dressing of good pricing do not have the negotiating power of someone like Blue Shield. They also come with their own conflicts of interest as exposed earlier this year by Bob Herman and STAT. This may paint a gloomy picture for those employers working with the Big 3 but there is an alternative path. Fortunately, it’s not just giant health plans like Blue Shield that can go a different direction.
Unbundling is available to employer groups of all sizes. The new Blue Shield strategy is the playbook that we've been running for years. Blue Shield is leveraging Mark Cuban pharmacy - SmithRx was one of the first adopters of The Cost Plus Drug Company. Blue Shield, through their diligence, has identified Amazon Home Delivery as their mail service partner. SmithRx has offered Amazon pharmacy to its members since it was known as “Pill Pack Pharmacy” and has moved into a broader more strategic relationship with them this year. These are just two of many programs that we offer through our Connect 360 programs which finds the lowest cost path available for drugs.
Alan Pannier
Chief Strategy Officer, SmithRx
Alan oversees the company's pharmacy initiatives, including manufacturer relations, network management, and clinical solutions. His background includes clinical leadership roles at Magellan Health and Veridicus Health, as well as hands-on experience as a practicing pharmacist. Alan's academic credentials include an MBA and PharmD from Idaho State University, a Bachelor's in Chemistry and Business from Westminster College, and specialized training in managed care pharmacy. His comprehensive understanding of the industry drives SmithRx's innovative approach to pharmacy benefits management.
