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PBM Benefit Insights

Three reasons a self-funded group under 10,000 lives should use a mid-sized Pharmacy Benefit Manager

It is worth evaluating the benefit of using a mid-sized PBM for self-funded entities providing pharmacy benefits to 10,000 or fewer.

The three largest PBMs, who hold over 80% of the industry market primarily focus on larger life group sizes. For smaller groups under 10,000 lives using a large PBM means having to work with a pharmacy benefit coalition.

A coalition is a group of purchasers of pharmacy benefit management services, who facilitate a channel for these large PBMs to aggregate pricing to the small group marketplace. Many coalitions enter into arrangements with their PBM vendors that restrict a plan or consultants’ access to crucial financial data and provide limited formulary and network options. This pre-negotiated offer may benefit a PBM financials and satisfy Wall Street, but often an employer ultimately ends up having limited transparency and restrictions to beneficial features. A small self-funded entity is not positioned for maximum benefit in this environment and can fare significantly better results marketing their plan independent of these aggregation approaches.

Here are some points to consider when evaluating a mid-sized PBM for your self-funded pharmacy plan.

1. Small groups (under 10,000 lives) are important to a mid-size PBM.

Independent mid-sized PBMs are focused on providing top-tier service regardless of a smaller plan size and are more accountable to an increase in a plan's pharmacy trend. A coalition amassing lives for pricing leverage with a large PBM will not be as invested in accommodating the unique needs of a small group with lives that do not significantly move the needle towards their financial advantage. A large PBM plans for client turnover and anticipates loss each year. Bottom line, they will not fight to keep your business when there are no incentives.

2. Mid-size PBMs allow a business more flexibility with their plan. Many small companies run like a large family. Owners and managers are sensitive to how their pharmacy benefit decisions may impact coverage of essential drugs. A mid-sized PBM and a well managed customized contract can provide an organization's unique needs and drug utilization a lot more flexibility.

3. Increased transparency, competitive pricing, and better contract terms with little disruption to your members.

A mid-sized PBM does not mean smaller pharmacy networks or limited formularies. Implementation is generally no more than just switching out a drug card.

Working with APC can connect you to a broader network of mid-sized PBMs.

APC understands that when considering an overwhelming spectrum of healthcare needs, it is easy to overlook the significance of having more control over your pharmacy plan spend. That is why APC wants to be your partner when making important decisions for your under 10,000 life group. Our expertise and industry knowledge can offer competitive pricing and trend management.

An APC partnership provides access to our industry relationships to help you find a PBM that will discount guarantees; one that will continually monitor and negotiate pharmacy contracts to ensure your agreed upon discounts are met, if not exceeded. Through scheduled reviews throughout the year, APC will ensure your PBM partner will be accountable for the plan's trend experience and will provide clinical programs to combat negative trends.

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