Survey Finds More than Half of Employers Not Confident in PBM Practices

Employers support policy reforms that can improve affordability. More than 80% of employers support both PBM and hospital reforms, according to the results of a survey by the National Alliance of Healthcare Purchaser Coalitions. Rising healthcare costs continue to be a concern among those surveyed, with 82% saying rising healthcare costs impacts their own organization’s competitiveness.

Michael Thompson

“Employers are frustrated that the healthcare system is designed to enrich the middlemen and is not delivering improvements in affordability, access or quality for purchasers or employees and their families,” Michael Thompson, National Alliance president and CEO, said in a press release.

The survey included 172 responses from private and public employers and purchasers. Respondents were from manufacturing, educational services, public administration, finance and insurance, and healthcare and social assistance institutions. Purchasers ranged in size with 38% having more 5,000 employees, 36% have between 1,000 and 4,999 employees and 26% have less than 1,000 employees.

The survey found that employers want greater financial control of their PBM relationships. In fact, 63% want to own their data and 55% want full audit rights. Additionally, 63% of those surveyed want full disclosure of all revenue streams from PBMs in the next one to three years and 59% want transparency regarding net cost by drug. And 49% want a comprehensive definition of the term rebate.

Employers in the survey are not confident in the practices of PBMs, and 51% are concerned about PBM integrity and administration. And 48% are concerned about whether PBM direct and indirect compensation is reasonable.

In terms of formulary management, 49% of those surveyed said in the next one to three years they want to use a value-based formulary versus a rebate-driven formulary, and 43% want the flexibility to customize the formulary with penalty. In terms of claims, 62% of survey respondents said they review pharmacy claims that go through the medical benefits, and another 26% are considering reviewing these claims.

Related: Employer Group Issues Guide for Contracting with PBMs

Earlier this year, the National Alliance released a playbook to help employers better assess how their PBMs are managing the drug benefit. The resource offers insights on the drivers of pharmacy benefit costs and value, as well as the flaws in the contracting and negotiation process.

The playbook suggests that employers maintain broad audit rights, that contracts define terms, own the data and customize formulary and utilization management. It also includes best practice checklists, sample questionnaires for selecting consultants and recommended contracting language. Included as part of the recommendations is that employers chose independent and qualified advisors who are aligned with the employer’s fiduciary obligation.