Prescription Drug Benefit

Prescription Benefit Management companies (PBMâ€™s) have become an integral, but complicated and necessary part of the health care delivery system today. PBMâ€™s contract with health care plans to administer prescription drug benefits on behalf of the plan sponsor or insurer and provide other programs such as utilization, disease management and other cost containment services, hopefully to reduce prescription drug costs.

PBMâ€™s often have rebate agreements with drug manufacturers and negotiate discounts with retail pharmacies to help plan sponsors reduce prescription drug costs for their employees. The PBM often serves as a â€œnetworkâ€ provider for prescription drugs.

There are generally three different contract models for a PBM. The traditional contract has little transparency on how money flows and often leads to confusion and loss of control by the plan sponsor. The second is a hybrid contract, which has more transparency to the employer, such as disclosure of rebate and drug discount arrangements. The third is the pass-through financial arrangement, where employers get 100 percent of the discounts and rebates and the PBM retains no margin income. With these type plans the PBM is usually compensated on a per prescription fee basis.

Unfortunately most PBM arrangements are a combination of all three of these contract types and are not very transparent. As a result evaluating a prospective PBM is very difficult. The only way we have been able to truly compare PBMâ€™s is to provide a list of previously paid claims and ask prospective PBMâ€™s to re-price them on their model.

Houze & Associates can shop your needed coverage to some or all of the following carriers:

Med-e-America