2016 will be a crazy year for PBMs and plan sponsors of pharmacy benefit programs. The cast of characters continues to shrink through market consolidation, and most analysts believe that the trend will continue. At Wilkinson Benefit Consultants (wbcbaltimore.com), we’ve listened to plan sponsors raise the questions of “Where do we turn?” and “How can we evaluate a PBM’s ability to reduce pharmacy benefit costs?”AsTheWorldTurns-WBC We’ve kept our hand on the pulse of the PBM world and know that these changes can be good for the plan sponsors. Why? As the Big Three  (Express Scripts, CVS Caremark,  OptumRx) continue with their insatiable acquisition appetite, and as their resultant integration efforts create service issue nightmares, the market has never been better for the second tier players to make their move. And with this move plan sponsors can find themselves in the drivers seat being able to negotiate very favorable terms and pricing.

As our loyal readers may recall, I predicted that 2016 will be ripe for picking a PBM apple. In my opinion, Express Scripts will be a seriously considered target, whether from a carrier such as Anthem or from Stefano Pessina, who may want to use his Walgreens Boots checkbook to expand his pharmacy empire. (Wouldn’t that be poetic justice!)

While the Big Three become even more focused on dealing with their jumbo accounts,  many “smaller” plans are searching for options.  There are a number of excellent alternatives that should be considered.  Some of our favorites are Navitus; EnvisionRx; Prime Therapeutics; and MedImpact to name a few. An RFP for PBM services can help identify those options and illuminate the features that are most important to a specific plan sponsor.  Remember, no single PBM can be best suited for all plan sponsors. After identifying the potential candidates, working with a consultant that can look beyond a pricing spreadsheet to help you truly assess a PBMs ability to perform as the plan desires, is highly recommended.  And during this process, it’s critical that the contract terms and definitions be acknowledged prior to accepting financial offers from the PBMs. Too often a boatload of time and money is spent on trying to evaluate a cost proposal without the benefit of a mutual agreement on what stuff means!  If a “winner” is selected without a defined contract, the sponsor will be sadly disappointed when the PBM tells them “we didn’t know you wanted that.  If we would have known, our pricing would be different.” Terms related to defining brands and generics, MAC pricing optimization, rebates, audit rights, and the all-important Specialty drugs must be addressed. (It’s shocking how frequently Specialty is still treated as an afterthought during the contract negotiation. Sponsors are aware of the costs as reported by their PBM, but do not have a good handle on the medical plan side of Specialty or are willing to accept the PBM’s description of how they plan to handle Specialty.)

As promised, this will be an exciting year in the PBM world. Stay tuned.  Much more to come!