PBM Reform Won’t Stop Rising Prescription Costs

Prescription drug costs are rising, and recent PBM (Pharmacy Benefit Manager) reforms and the FTC settlement with Express Scripts Inc (ESI) have made headlines. But for most employers, these changes won’t magically lower your drug bills.

Here’s why: new laws mainly affect Medicare Part D, not employer plans. And while the FTC settlement could help some, PBMs will likely find ways to make up lost money. That means employers still need to take charge of their pharmacy costs.

Here are five common ways your pharmacy might be quietly going up, and how to fix them.

1. Ignoring Your Pharmacy Plan

Managing a pharmacy plan is complicated, and many employers don’t have the time or staff to do it. It’s easy to just renew whatever your broker suggests each year, but that “hands-off” approach often costs you more.

If you don’t understand where your pharmacy dollars are going, your broker and PBM could be benefiting while your employees’ health doesn’t improve. Learn the basics, review your plan carefully, and consider hiring an independent advisor who works only for you. Even small changes can save money and improve employee health.

2. Not Focusing on Value

“Value” can be a buzzword, but here it means getting better health results for every dollar spent. If your drug costs keep rising but employees aren’t healthier, something’s off.

High list prices, rebates, and limited use of cheaper alternatives like biosimilars often inflate costs without helping anyone. Ask your PBM how they price drugs, how they decide what goes on the formulary, and whether cheaper, effective options are used.

3. PBM Fees Tied to Expensive Drugs

Many PBM fees, like for mail-order or specialty drugs, are linked to the drug’s list price. This encourages the use of expensive medications, even when cheaper options work just as well.

The FTC settlement forces ESI to separate their fees from drug prices, which is a good move, but it may not apply to all PBMs. Push for transparent, flat fees and pricing based on the lowest net cost so your plan isn’t overpaying.

4. Overlooking How Well Medications Work

Lowering drug prices isn’t enough, you also need to make sure medications actually help employees. Programs like comprehensive medication management and genetic testing can help ensure the right drugs are used.

Poor medication use drives more than 15% of healthcare costs. By helping employees take the right drugs effectively, you can reduce hospital visits, ER trips, and overall spend.

5. Not Watching Prescribing Habits

Doctors don’t always prescribe the lowest-cost, most effective drug. Marketing, patient requests, and habits can influence choices.

You can help by giving prescribers unbiased cost and effectiveness info, showing drug prices at the time of prescribing, or flagging unusual prescribing patterns for review. Even small nudges can make a big difference.

The Takeaway

PBM reforms are helpful, but they won’t fix everything. Employers still need to actively manage both PBM-related and other factors that drive drug costs up.

Start by looking at these five areas in your plan. Make a clear plan to tackle them, and you can save money while helping your employees stay healthier.