How PBM Contracts Use Misleading & Opaque Language
In today’s ever-evolving health care landscape, pharmacy benefit plans play a crucial role in managing medication costs for employers. As employers seek to provide comprehensive health care benefits to their employees, understanding the intricacies of pharmacy benefit management (PBM) contracts becomes paramount.
Unfortunately, PBM contracts often employ opaque and misleading language, leaving employers uninformed about the complexities of their pharmacy benefit plans. The AffirmedRx team aims to shed light on this issue, unveiling the deliberate tactics used by PBMs and highlighting the importance of transparency.
The Opaque Language of PBM Contracts
PBMs are intermediaries between employers, pharmacies, and drug manufacturers. While their primary purpose is to reduce costs and improve medication access, some contracts employ language that intentionally obfuscates the true nature of the agreements. Complex terminology, convoluted pricing structures, and hidden fees are often utilized, making it challenging for employers to fully comprehend the terms they agree to.
This deliberate lack of transparency can be identified through:
- Spread Pricing: This common tactic employed by PBMs charges employers more for medications than they reimburse pharmacies. The difference between these amounts is often kept hidden, leaving employers unaware of the true cost of the medications provided to their employees. Oftentimes, the extra money made from these deals is pocketed by the PBMs.
- Rebates and Discounts: PBMs negotiate rebates and discounts with drug manufacturers, creating potential savings. However, the lack of transparency regarding the distribution of these savings can leave employers in the dark about the actual benefits they receive.
- Complex Formularies: PBM contracts frequently contain formularies that determine which drugs are covered and at what cost. These formularies can be convoluted, making it difficult for employers to understand which medications are covered and the corresponding copayments. One of the leading issues of pharmacy benefit plans concerns biosimilar and generic drugs, which are often taken off the plan in order to increase PBM profit.
The Impact on Employers
The intentional use of opaque and misleading language in PBM contracts has several negative consequences for employers:
- Inflated Costs: The lack of transparency regarding spread pricing and rebate distribution can lead to inflated medication costs for self-funded employers. This not only affects their bottom line but also hampers their ability to provide affordable health care benefits to their employees.
- Limited Control: The complex nature of PBM contracts can leave employers with limited control over their pharmacy benefit. Without a clear understanding of the terms, employers may find it challenging to make informed decisions about coverage, formularies, and cost-sharing arrangements.
- Employee Dissatisfaction: Employees rely on their employer-sponsored health plans for affordable access to necessary medications. When these contracts are shrouded in ambiguity, it can result in confusion, frustration, and decreased employee satisfaction.
Advocating for Transparency
To address the issues surrounding PBM contracts, employers must demand transparency and take proactive steps to protect their interests:
- Contract Evaluation: Employers should carefully review and analyze the language of PBM contracts before signing them. Seeking legal or consulting expertise can be beneficial in identifying hidden clauses, fees, and unfavorable terms.
- Cost Audit: Conducting regular audits of their PBM can help employers access the true cost of medications and evaluate the performance of their PBM contracts. This provides an opportunity to identify areas for cost savings and renegotiate terms with PBMs.
- Collaborative Relationships: Employers should foster an open and collaborative relationship with their PBM. By demanding transparency and actively participating in the decision-making process, employers can ensure that their pharmacy benefit plan aligns with their organizational goals and provides maximum value for their employees.
Additionally, we have created a grading scale on PBM performance to understand how your PBM ranks regarding patient satisfaction.
AffirmedRx: Patients over Profits
In a health care system where transparency is paramount, employers must be aware of the intentional use of opaque and misleading language in PBM contracts. By understanding the tactics employed by PBMs and advocating for transparency, employers can navigate the complexities of a pharmacy benefit plan, control costs, and provide comprehensive health care benefits to their employees. Demanding clear and concise language in their contract is not only a step toward financial savings but also a commitment to the workforce’s well-being.
When working the AffirmedRx, there is no question that your pharmacy benefit plan is transparent and suited to your organization’s needs. We ensure employers receive the lowest cost care with the highest clinical value. Contact our team today to get exceptional pharmacy benefit management support.