Tuesday, September 13, 2016

Chicken Soup for the Self-Funded Employer: Foolproof PBM Contracts

Having spent all of my post-graduate years (15) in the pharmaceutical industry, I've come to know two immutable pharmacy benefit management principles and they are:

1) You get what you exactly measure [payer-side]
2) The things that you measure, costs and outcomes, will get gamed 

Analytics may help ease the pain but don't alone solve the problem which is excessive overpayments. Furthermore, analytics can worsen the problem because purchasers rely too heavily on it. In other words, don't rely solely on analytic software programs and all the neat reports they spit out especially if what's being measured is inherently flawed (i.e. AWP and MAC).

Eliminating overpayments is done two ways:

➤ Sophisticated purchasers, of PBM services, with super strong negotiating skills lead the procurement of services. 
➤ Enter into a fiduciary or foolproof PBM Services Agreement. A business process is still required to systematically measure performance throughout the contract term. 

Here is a screenshot of just some of the language in a fiduciary contract.
[Click to Enlarge]
Douglas Adams wrote in Mostly Harmless, "a common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools." I'm reminded of this each time I read something about the Anthem, Express Scripts dispute or Wells Fargo.

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