For every complex problem there is an answer that is clear, simple, and wrong.
Thank you, HL Mencken, for describing the problem inherent in picking a workers’ comp PBM based on how much they charge for drugs.
It is really easy to compare bids from PBMs based solely on how much they’ll charge for brands and generics.
It is also wrong.
While workers comp insurers have (mostly) figured out that the price of the pill is a lousy way to decide on a PBM, every now and then I get a call from a payer who’s just been offered a GREAT price from a PBM, and is either a) gleeful that they have been so smart and such a cunning negotiator; or b) panicked because their boss wants to change PBMs and the vendor manager knows it’s going to blow up.
Okay, let’s walk thru this.
The price of the pill is important, but it is only ONE part of the equation. Which is as follows:
Price per pill x number of pills per script x percentage of scripts processed in the PBM’s network.
Price per pill is determined by the discount below AWP, brand:generic mix, and, most importantly, by the type of pills dispensed. If a PBM does a crappy job managing the clinical aspects of the pharmacy program, you’re going to pay for far too many pills, and for the wrong kind of pills. It’s safe to say you’ll be paying for lots of opioids, Soma, and other highly-questionable-if-not-downright-harmful-drugs.
But hey, at least you’re getting them for cheap!
Lets say you don’t care about the kind and volume of pills, you just want the deep discount. Even then, you will likely find the cheap PBM delivers crappy results. Here’s why.
PBMs that pitch really low per-pill pricing are likely using a group health-contracted pharmacy network, which leads to problems with paper bills and administrative hassles for adjusters. Regardless, the network penetration for the cheapo PBMs tends to be pretty low compared to the WC PBMs. There’s a bunch of reasons for that which I won’t get in to here.
Suffice it to say that while you may get a great price on 40% of your scripts, you’ll be paying flat-out retail on the other 60%.
In contrast, WC PBMs typically deliver penetration in the 80+% range.
So, even if their discount isn’t nearly as low as the cheapo ones, the effective price will likely be lower – because you get that discount on twice as many scripts.
What does this mean for you?
Look at the price, sure, but look at penetration. And, of course, clinical programs.
Because the greatest penetration in the world is a big problem if its all opioids and Soma.