Why PBM Oversight is Critical for all Pharmacy Plans

Monitoring pharmacy contracts and implementing an effective PBM oversight solution are crucial for self-funded plans to drive transparency, ensure PBM accountability, and prevent financial shortfalls.

In a recent Truveris webinar, “Rethinking Pharmacy Reporting & Achieving Effective Oversight,” our pharmacy experts explored the key challenges with PBM reporting, why continuous pharmacy contract monitoring is critical, and, how you can achieve pharmacy oversight to ensure fiduciary responsibility.

Pharmacy Contract Oversight Defined

Pharmacy oversight is a proactive and ongoing process that ensures employers have full visibility into their pharmacy benefit programs and can hold their PBM accountable to their contract. Oversight involves monitoring claims, pricing, and contract guarantees to identify errors, variances, and trends that might otherwise go unnoticed in standard PBM reporting. An oversight program works in real-time to mitigate risks and provide actionable insights to prevent financial shortfalls and ensure plan compliance. By leveraging independent oversight, employers can validate PBM performance, optimize plan strategies, and fulfill fiduciary responsibilities.

PBM Reporting

For each pharmacy contract, a PBM will provide reporting to plan sponsors on high level performance metrics, which may include utilization and drug spend.

However, plan sponsors can sometimes lack visibility into their pharmacy program’s performance and whether or not the contract is being executed properly. As a result, they may not have insight into:

• Claims Adjudication Errors: Errors or mistakes in the claims adjudication process are common. and pricing errors can occur with any type of medication, not only the high-cost or specialty drugs. Even a minor error in pricing by the PBM can lead to bigger financial impact if left undetected.
• Rebates: The introduction of rebate credits has made pharmacy contracts more complex. Plan sponsors may not have access to rebate tracking and reporting, calculations, trends over time, and how the plan measures up to its peers.
• Pricing Variances: Drug pricing can often vary for the same medication and member – and variances in the pricing can change throughout the year.

The Importance of Pharmacy Contract Oversight

Pharmacy contract oversight allows plan sponsors to navigate the ever-growing complexities of pharmacy contracts and meet their fiduciary responsibilities. In light of the Federal Trade Commission’s (FTC) ongoing PBM investigation and several employee class action suits against employers for allegedly breaching their fiduciary duties around pharmacy benefits, pharmacy oversight has become more important than ever. Plus, PBMs sometimes make mistakes in their reporting, and the more complex and customized a contract, the higher the chance there is for errors.

Pharmacy oversight can also reveal significant discrepancies in reporting and differences between surpluses and shortfalls that may result in millions of dollars of unrealized savings. A Truveris analysis found that 90% of pharmacy contract reviews detect some level of variance from the existing PBM contract. Through pharmacy oversight and audits for one client, Truveris identified more than $5 million in variances over a three-year period.

How to Ensure Pharmacy Oversight

With effective pharmacy oversight, plan sponsors can have increased transparency  into their plan’s performance. Here is how your organization can launch a pharmacy oversight initiative:

1) Monitor Key Metrics: Make sure you are monitoring all claims data available. Ideally, these would include 100% of claims throughout the year, rather than a sample of claims. While there are a host of metrics to pay attention to, some of the top metrics include:

• Drug spend, including specialty
• YoY pricing variances
• Spend and utilization by therapeutic class
• Guarantee shortfalls and surpluses
• Rebate guarantee performance
• Generic Dispensing Rate (GDR)

2) Partner with a Pharmacy Expert: Working with a pharmacy oversight partner can allow you to have comprehensive and ongoing reporting and analysis. Not all partners, however, are created equal. When evaluating a potential partner, here are some considerations:

• Independence – The pharmacy oversight partner should be unbiased and independent from PBMs and not financially incentivized by them.
• Simple implementation – Oversight shouldn’t be a burdensome process, so make sure the partner you choose offers seamless implementation, does the heavy lifting analysis, and doesn’t require a lot of time to get up and running.
• Data expertise – The partner should work with you to ensure you understand what your data means and provide meaningful insights and tailored recommendations that inform your future plan designs and procurements.
• Claims readjudication – Team up with a vendor that re-adjudicates 100% of your claims, not only a sample size, and doesn’t just repackage your PBM’s existing reporting.

Pharmacy oversight is more than a safeguard—it’s a strategic advantage. By ensuring full transparency into claims, rebates, and pricing guarantees, oversight empowers plan sponsors to identify hidden variances, hold PBMs accountable, and protect their bottom line. It’s a proactive approach that drives cost savings, ensures compliance, and provides actionable insights to optimize future pharmacy contracts.

Partnering with an independent, unbiased oversight expert is the key to navigating today’s complex pharmacy landscape. With tools like truGuard, Truveris enables employers to gain 100% visibility into their pharmacy program, ensuring accountability and driving long-term savings.

To learn more about ensuring accountability and transparency, watch our webinar, “Rethinking Pharmacy Reporting & Achieving Effective Oversight,” 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.