What questions should I ask when selecting a pharmaceutical benefits manager?

Pharmaceutical benefits managers (PBMs) to make sure the best pharmacy decisions are being made for your company and your employees. What questions can you ask to help you select the right PBM?

Answer: Pharmaceutical benefits managers (PBMs) have a tremendous impact on U.S. health care decision making because they influence more than 80 percent of prescription drug coverage. The National Community Pharmacists Association, www.ncpanet.org, suggests following 10 questions to help you select the best PBM for your company:

1. Do you use the same average wholesale price (AWP) in calculating price to clients and payments to pharmacies? Some PBMs realize hidden profits by employing a practice known as "differential or spread pricing." Differential pricing is when a PBM establishes a discount off the average wholesale price (AWP) for the individual employee filling a prescription, but establishes a different AWP discount for retailers.

2. Do you participate in rebates from drug manufacturers? PBMs often receive rebates from drug manufacturers in return for placing products on formularies and for working to increase sales volume for these drugs. Some employers allow PBMs to keep 100 percent of rebates in exchange for lower administrative fees. Alternatively, you may prefer a sharing arrangement, typically 50/50.

3. What other payments do you get from drug manufacturers besides rebates? Some PBMs reclassify rebates using categories such as education grants, research, advertising, promotion, access fees, formulary management fees and data collection fees.

4. Do you have any plans for mandating mail order on any drug or drug category? The option of transitioning to mail order only can be very unpopular.

5. Does your formulary limit drugs that will be covered? A formulary is a list of "preferred drugs that pharmaceutical manufacturers discount to employers and other groups in exchange for volume usage." Make sure that any switching of drugs is constructed to save you money and not the PBM.

6. How often do you change your formulary? In most states, even though medications may be covered when the health plan is selected, a PBM may change its list of approved medicines at any time throughout the year. Make sure your PBM notifies you of formulary changes.

7. How are co-payments set? Some plans have a tiered co-pay: different levels of co-payments for different medications. Ask about how you and plan members will be notified when the PBM makes a tiered co-pay change for a medication.

8. Are you currently the subject of any lawsuits or investigations relating to your business practices? Research lawsuits or government investigations against PBMs that are public knowledge. Ask about PBM practices for reporting fraud and abuse and for external audits.

9. Can you provide a detailed explanation of your health plan's fee schedule and specifically the cost of clinical programs? Be sure to compare "apples to apples" when evaluating a financial proposal from a PBM. Inexpensive claims processing fees may be less attractive if you are "nickel and dimed" on everything else.

10. What is your policy on selling pharmacy data? In the business of health care, information equals revenue. You have the right to demand that your company's proprietary information not be sold by your PBM to the highest bidder.

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