Friday, February 14, 2020

Tip of the Week: Don't Give Up Leverage to PBMs

When you have something someone else wants you have leverage. You may use leverage to compel people to change their behavior, change the shape of time, move forward your position, and make concessions. For this reason, leverage is currency and it must be used as such. It has value and must be exchanged for value.

Effective negotiators never give away leverage without getting something of equal or greater value in return. In today’s PBM procurement environment, winners are selected before the PBM consultant ever drafts, negotiates and finalizes the PBM contract. Because the PBM is essentially competing against itself, this puts the plan sponsor at a huge disadvantage.

When finalists or winners are selected before the contract is finalized, plan sponsors relinquish the leverage necessary to win any additional contractual concessions. Memorialize details in the contract language that are important to your organization before notifying finalists and selecting winners.

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