Innovation

PBM Contracting Strategy - Rebates


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.

Manufacturer Revenue / Rebates Definition –

Instead of defining pharmaceutical manufacturer payments solely as rebates, a broader definition of manufacturer revenue should be used to capture additional payments tied to a PBM client’s applicable claim volume.  The definition of manufacturer revenue should include all sources of discounts and revenue received by PBM, such as formulary and market share rebates, rebate administration fees, price protection rebates, data and service fees that are associated with client’s applicable claim volume.

By limiting the financial guarantee to rebates, the PBM may reclassify or shift remuneration received from manufacturers to alternative revenue categories and decrease the total dollars that are guarantees and must be passed through to the PBM client.

Take Health Strategy’s PBM Agreement Assessment –

How does your contract’s rebate 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.