Innovation

PBM Contracting Strategy - Brand & Generic Drug Definition


A core principle at Health Strategy is that a plan sponsor’s PBM agreement is fundamental to a comprehensive pharmacy benefit. Our contracting strategy starts with time-tested, algorithmic based definitions and pricing conditions. Slight nuances in these critical terms can be worth millions of dollars and if not accounted for properly, result in inaccurate total drug cost projections.

Brand & Generic Drug Definitions –

It is crucial for your PBM Agreement to include strong definitions for brand and generic drugs.  To simply state that brand and generic designation is determined by Medi-Span® or First Databank drug databases is not enough.  Neither of these databases specifically designate whether a drug is a brand or generic, rather they provide associated indicators that the PBM applies in determining a drug’s designation.  Therefore, the brand and generic drug definitions should specify a Medi-Span® or First Databank indicator-based algorithm for such determination.  This approach ensures consistent and auditable brand and generic drug definitions upon reconciliation of pricing guarantees.

Without clearly defined and appropriate Brand and Generic Drug definitions, PBMs have the latitude to selectively classify drugs as a Brand or Generic to achieve contractual pricing guarantees.

Take Health Strategy’s PBM Agreement Assessment –

How does your contract’s brand & generic drug definition stack up against Health Strategy’s best practice? Health Strategy assesses over 35 factors when analyzing a PBM contract (Contract Vulnerability Assessment). Given the interdependencies, it is not enough to have “most of them.”

Take Health Strategy’s PBM agreement assessment today to see how your contract stacks up against Health Strategy best practices.

Take Health Strategy’s PBM agreement assessment today to see how your contract stacks up against Health Strategy best practices.