The Future of Specialty Pharmacy and PBM Rebate Pass-Through Arrangements

Ben H.

Hatched by Ben H.

Dec 15, 2023

3 min read

0

The Future of Specialty Pharmacy and PBM Rebate Pass-Through Arrangements

Introduction:

The pharmacy benefit management (PBM) industry is undergoing significant changes, driven by calls for greater transparency and the demand for full pass-through of rebates to employers. In this article, we explore the role of specialty pharmacies and the surprising data on employer-PBM rebate pass-through arrangements in 2023. We also delve into the potential impact on the industry and provide actionable advice for employers and PBMs.

The Rise of PerformSpecialty:

PerformSpecialty, a fully owned and integrated specialty pharmacy, has emerged as a game-changer in the industry since its launch in 2014. With a focus on clinical culture and member-centric programs, PerformSpecialty offers personalized medication, support, and adherence programs for complex conditions. By leveraging PerformRx's direct access to the specialty pharmacy supply chain, PerformSpecialty ensures a seamless and holistic care package for specialty medication users, reducing gaps in care and promoting overall health.

The Push for Transparency:

Amidst growing concerns surrounding the practices of PBMs, there is a strong impetus for increased transparency in the industry. Many employers are now demanding full pass-through of rebates negotiated by PBMs, with only about 60% of employers reporting that their PBM passes through all rebates on traditional and specialty drugs. This discrepancy between employer-reported figures and PBM claims highlights the need for a closer examination of rebate pass-through arrangements.

Surprising Findings on Rebate Pass-Through:

Recent data reveals some unexpected insights into the rebate pass-through practices of PBMs. While slightly less than 60% of employers report receiving 100% of rebates for both traditional and specialty drugs, one-third of employers opt for spread pricing for their pharmacy networks. This means that a significant proportion of employers are not receiving the full benefits of manufacturer rebates negotiated by PBMs.

The Impact on Large and Small Employers:

The data also highlights a notable difference in rebate pass-through responses between large and small employers. For traditional drugs, 50% of larger employers with 5,000 or more beneficiaries report receiving 100% of rebates with a minimum guarantee. In contrast, only 30% of smaller employers receive a minimum guarantee. This discrepancy suggests that larger employers are better positioned to negotiate favorable rebate pass-through arrangements, leaving smaller employers at a disadvantage.

The Changing Landscape of PBMs:

The findings of the rebate pass-through data shed light on the evolving landscape of PBMs. It is estimated that large PBMs now generate a majority of their profits from pharmacy buy-sell dispensing spreads, the 340B Drug Pricing Program, copay maximizers, group purchasing organizations, and other manufacturer services. This shift in revenue streams underscores the importance of reassessing current PBM practices and exploring alternative models that prioritize transparency and fair reimbursement for employers.

Actionable Advice for Employers and PBMs:

  • 1. Prioritize Transparency: Employers should prioritize transparency when engaging with PBMs. Request detailed reports on rebate pass-through arrangements and negotiate for full transparency in pricing and reimbursement models.
  • 2. Explore Alternative Models: Employers should consider alternative models, such as direct contracting with specialty pharmacies like PerformSpecialty. By eliminating the middleman, employers can ensure greater control over rebate pass-through arrangements and optimize the value of specialty medications for their employees.
  • 3. Advocate for Legislative Changes: Employers and industry stakeholders should actively support efforts to introduce national legislation that mandates full pass-through of rebates to plan sponsors. By advocating for greater transparency and fair reimbursement practices, employers can contribute to a more equitable and efficient healthcare system.

Conclusion:

The landscape of specialty pharmacy and PBM rebate pass-through arrangements is undergoing significant changes. PerformSpecialty has emerged as a leader in the industry, offering personalized care and reducing gaps in specialty medication services. The data on rebate pass-through arrangements highlights the need for increased transparency and fair reimbursement practices. Employers and PBMs must work together to prioritize transparency, explore alternative models, and advocate for legislative changes to create a more equitable healthcare system for all.

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