Creating a More Successful PBM-Client Relationship

Finding the Right PBM Partner

Finding a prescription benefit manager (PBM) that offers savings, flexibility and alignment to the plan sponsor’s goals can be a challenge. With the availability of varying models, ranging from traditional to pass-through, shopping for the right PBM comes down to understand the contract details. Traditional PBMs may seem transparent. However, in mining their details, their complex contracts can include hidden revenue streams, lack flexibility, and contain confusing definitions that can be costly. Pass-through PBMs offer an alternative—with complete revenue visibility, upfront fees, flexibility, client-friendly contracts, and full audit rights down to the claim level.

San Diego Electrical Health & Welfare Trust (the Trust) experienced this situation first-hand. In working through a contract renewal with its former PBM, the Trust and its consultant uncovered questionable contract details. Through further evaluation, the Trust realized its PBM lacked transparency and flexibility, leaving them to wonder if they were receiving all the available savings.

Looking at PBMs through a new lens, the Trust went out to bid, carefully scrutinizing PBMs based on their models and contract language. Their goal: complete transparency and pass through to reduce costs.

The Trust expected its new PBM partner be committed to full disclosure, complete pass-through, and most importantly, protecting the Trust’s interests. During procurement, they discovered that many PBMs claim transparency and pass-through of all savings. Based on the Trust’s experience, this is just not the case. Integrity and conviction are the standards by which the Trust operates, and it insisted on the same values of its PBM. Consequently, the Trust selected Navitus.

The collaboration between the Trust and Navitus resulted in an impressive first year. Trust members are enjoying a rich pharmacy benefit after experiencing a seamless implementation. Membership increased by more than 500 members, yet the total claim count decreased by 3% — solid proof that Navitus does not increase claims volume to drive up revenue.

In addition, the Trust’s total net cost per member per month (PMPM) decreased by 21% in the first year – from $30.04 down to $23.76. The Trust also avoided unnecessary costs that would have been unavailable through its incumbent PBM. As illustrated, its trend would have continued to accelerate by 3.2%, based on the PBM’s national published trend. With Navitus, the Trust experienced a substantial decrease in total net cost PMPM in the first year.