Pharmacy Benefit Reform Is Coming - Is Your Organization Ready?

The prescription benefits landscape is evolving. In our recent educational webinar with Society for Human Resource Management (SHRM), SmithRx Clinical Strategy Director Alissa Johnson, and Rena Cater, VP of HR at Eagle Transport Corporation, explored how recent developments may affect HR leaders' approach to pharmacy benefits.

Why Now? Understanding Today's PBM Landscape

Recent industry developments have brought prescription benefit management practices into focus. Congressional hearings, FTC investigations, and major media coverage, including a notable New York Times article, have increased attention on traditional PBM practices. This heightened scrutiny has led many organizations to examine their current arrangements.

Legacy PBM models often include:

• Discount-based pricing approaches
• Various fees and revenue streams
• Complex rebate arrangements

Learn more: Legacy PBM Fee Structures: 4 Tactics That Hide True Costs

Beyond Traditional Models

During the webinar, Johnson outlined how different approaches to prescription benefit management may affect both organizations and their employees. She noted that while traditional models often emphasize discount percentages, focusing solely on discounts may not provide a complete picture of actual medication costs.

Modern, cost-based approaches typically offer:

• Focus on actual net medication costs
• Transparent pricing structures
• Direct pass-through arrangements
• Simplified rebate handling

“It's definitely a really big issue and having been with a traditional PBM for many years and then having the opportunity to move to a non-traditional [PBM] really opens your eyes,” explained Cater.  “If you're currently in that traditional PBM, you need to be very diligent and you're not going to have access and transparency to your costs like you do with a non-traditional [PBM]. But utilize your network, talk with other HR professionals, pick a couple of those key drugs and compare what they're paying versus what you're seeing your employees pay. And if you can be diligent with that and explore your opportunities of maybe carving out to a non-traditional PBM or maybe even being really proactive and going to a captive, you will have so much more visibility to your data that you're going to be able to see the difference almost immediately.”

The Self-Funded Consideration

Many organizations are exploring self-funded models for their prescription benefits. As Johnson explained, this approach can provide several potential advantages for organizations looking to enhance their benefit programs.

Key features of self-funded arrangements may include:

• Benefit adjustment flexibility
• Federal regulatory framework
• Enhanced plan design options
• Access to program data

Moving Forward: Evaluating Your Options

As you consider your organization's approach to prescription benefits, several key areas may warrant examination:

1. Understanding your current arrangement's fee structures and revenue sources
2. Reviewing rebate distribution approaches
3. Assessing formulary management processes
4. Evaluating contract flexibility

Check out our PBM Evaluation guide for a comprehensive look at how to assess your current arrangement and explore modern alternatives. Our guide walks through each of these critical areas and provides the questions you need to ask your current service vendor.

Lead Change, Protect Benefits

The PBM landscape is changing rapidly, and HR leaders are positioned at the forefront of this transformation. As Johnson and Cater both shared throughout the presentation, we're seeing unprecedented attention on PBM practices from Congress, the FTC, and major media outlets. But more importantly, we're seeing organizations take action to protect both their interests and their employees' wellbeing.

“My advice for you all is to really keep your eyes open and be willing to listen to other alternatives,” Cater urged her peers. “If you're currently fully insured, go ahead and explore being self-funded. The more you can be self-funded and have that non-traditional PBM in place, the more visibility you're going to have to your data. You cannot manage what you cannot see.”

The path forward is becoming clearer. Through real-world examples and practical insights, HR leaders can navigate these changes to create better outcomes for their organizations and employees alike. 

Ready to dive deeper? Watch the complete webinar to hear the full analysis.