3 Strategies to Enhance PBM Accountability

While Pharmacy Benefit Managers (PBMs) have dominated news headlines for quite some time, they have increasingly come under inspection in recent months. Between the Federal Trade Commission’s (FTC) ongoing investigation and several employee class action suits, to media outlets shining a light on PBM business practices, one thing is clear: accountability and transparency are critical.

In a recent Truveris webinar, “Strategies for Navigating PBM Accountability,” our pharmacy contract experts took a deep dive into the latest PBM news, the impact on plan sponsors, and actionable strategies for employers and brokers to successfully navigate the evolving pharmacy benefits landscape.

PBM Practices Under Examination

PBMs continue to take center stage with news ranging from government scrutiny to legal allegations and lawsuits. Here are the latest developments you need to know.

1) FTC Initiatives
In 2022, the FTC launched an investigation and issued an order compelling PBMs to provide documentation about their business and contracting practices.

In July of 2024, the FTC launched an interim report alleging that vertical integration and market consolidation have allowed a few PBMs to exert outsized power over drug and consumer prices. For example, they cite that the top 3 PBMs process nearly 80% of the drugs dispensed in 2023. The report also stated that health plans reimburse their PBM-affiliated pharmacies for certain drugs at rates 20 to 40 times higher than the national drug acquisition cost (NADAC). A few weeks ago, the FTC announced plans to sue the 3 largest PBMs: Caremark Rx, Express Scripts (ESI), and OptumRx. ESI has stated they are counter-suing the FTC to take down the report, alleging it’s false and misleading.

2) Employee Class Action Lawsuits
In two recent class action suits, one against Johnson & Johnson and one against Wells Fargo, employees allege that the companies mismanaged their pharmacy benefits and violated their fiduciary duties under the Employee Retirement Income Security Act (ERISA) by not acting in the best interests of their plans and its beneficiaries. Consultants for both companies were also named in the lawsuits. While it’s unclear what the outcome will be, experts agree this type of litigation will only continue and these cases demonstrate what can happen when employers do not have prudent oversight and management of their pharmacy benefits.

3) Increased Media Attention
There have been many published stories in major media outlets drawing attention to PBM practices and how they impact employers and American consumers. The New York Times released a deep-dive article around PBM practices in June, and in September they published a follow-up article about how the FTC has sued 3 large PBMs, alleging that insulin prices are being artificially inflated due to their practices that boost profit.

How Employers Can Navigate PBM Accountability

With increased awareness about the various business practices and revenue sources for PBMs, employers and benefit consultants are looking for ways to drive more transparency and accountability. Here are 3 strategies to drive transparency in pharmacy benefits:

Strategy #1: Partner with Independent Pharmacy Experts
It’s possible that pharmacy vendors, coalitions, and brokers may have direct financial relationships with PBMs and can be incentivized to drive clients to specific pharmacy programs.

Therefore, it’s important to work with a vendor that has no financial conflicts of interest or incentives to PBMs or coalitions. These vendors can facilitate competition in an open marketplace, allowing employers to accurately compare contract terms and ensure they are accepting an offer that meets the needs of their organization. These partnerships also allow them to achieve organizational and fiduciary goals, while ensuring the most transparent pharmacy contract possible.

Strategy #2: Ensure Proficiency with Pharmacy Contracts
Pharmacy contracts are exceedingly complicated, nuanced, and often difficult to understand. Without clarity provided by dedicated PBM contract experts, employers could be vulnerable to missing key contractual language that could have significant financial impacts on their organization.

Look for key contract terms that support increased transparency, such as:

• Offsetting methodology
• Pricing guarantee methodology
• Termination language
• Market check termination
• Rebate exclusions
• Transparent pharmacies

To ensure full understanding of these terms and their impact, be sure to work with a pharmacy contract expert who can advise and support throughout the process.

Plan sponsors should also check their contract for transparency. This includes requiring vendors, including your incumbent, to disclose all data releases, LOAs, and NDAs. Additionally, plans should encourage their incumbent vendor to start the renewal process as early as possible so there is ample time to negotiate and make changes.

Strategy #3: Implement Third-Party PBM Oversight
Most employers receive reporting on only a small sample of claims, with reports supplied directly by the PBM. This is both insufficient and inherently conflicted. For an employer to meet their fiduciary responsibility, they must hold their PBM accountable on an ongoing basis. With a tool that adjudicates 100% of claims, you can ensure every single claim is processed correctly and adheres to your unique set of contract terms.

As PBM practices evolve quickly, there is increased pressure on PBMs from multiple stakeholders to be more transparent and an increased focus on fiduciary responsibilities. With growing complexity, plan sponsors must ensure they have strategies and solutions in place to ensure PBM accountability, which include having pharmacy contract proficiency, ensuring oversight, and working with an independent pharmacy partner to allow decisions to be made that benefit your plan and members.

To learn more about ensuring accountability and transparency, watch our webinar, “Strategies for Navigating PBM Accountability,” or contact us today.

Truveris is a leading digital health company focused on delivering truth and clarity in pharmacy. Truveris’ proprietary technology, coupled with deep pharmacy expertise, helps to build a more efficient market that maximizes choice, accessibility, and prescription drug affordability. Our solutions provide the insight and knowledge to help people lead healthier and more productive lives.