Build Better Benefits with A Pharmacy Benefits Optimizer (PBO)

Plan sponsors—from small to large companies, to hospitals and health systems, to labor unions—all face the same challenge when it comes to their benefits portfolio: Offering their employees best-in-class health benefits that meet evolving demands while also keeping overall costs low for the organization.

With claims costs continuing to rise, more expensive specialty medications and treatments being offered for complex and chronic conditions, and even more calls for employers to provide attractive health benefits, forward-thinking plan sponsors are turning to independent experts for smarter benefit design.

What is a pharmacy benefits optimizer (PBO), and why do employers need one?

Employers are asked to evaluate their benefits as a full package offering, and often in terms of lines on a spreadsheet. However, not all comparisons are apples to apples, nor are they transparent when evaluating their long-term value to an organization.

Pharmacy benefits tend to be the most highly utilized, with more than half of members using their drug plan annually. Over the last decade, the costs associated with this critical benefit have skyrocketed, with $0.22 of every healthcare dollar spent on premiums going to prescription drugs. This trend is expected to continue growing, driven primarily by high-cost specialty drugs.

But how are employers supposed to determine if they’re getting the most effective benefit from their pharmacy provider, such as if the savings truly add up or if their employees are receiving proper care? This can be especially difficult; it requires an above-average understanding of industry trends and the complex pharmacy ecosystem.

An independent expert can help employers make smarter choices for sustained savings and improved health and safety of members.

A pharmacy benefits optimizer (PBO) is a specialized, neutral third party that acts in the best interest of the client—the employer group—across every party involved in a pharmacy transaction: the Pharmacy Benefit Manager (PBM), the payer, Big Pharma, pharmacists, and members who depend on access and effective interventions.

What’s the difference between a PBO and a PBM?

Unlike other types of pharmacy benefit partners, a PBO provides advocacy and solutions. A PBO differs from a PBM in that it acts independently of the key players in the pharmacy ecosystem, cutting through their competing priorities to serve in the best interest of plan sponsors and their members.

PBMs negotiate with drug manufacturers and wholesale distributors to purchase medications at a lower price and receive generous rebates in exchange for giving a drug preferred placement on the formulary. Instead of placing the lowest-priced drug on the formulary and passing the savings to payers, PBMs may implement programs that direct pharmacies to supply the drug with the highest rebate value to boost their profits.

Additionally, many PBMs own their own retail, mail, and specialty pharmacies. They may employ profit maximization strategies that drive utilization – and revenue – to their pharmacies first. These practices can lead to vague and misleading contract terms and limited application of cost-saving benefit design and clinical management strategies, in favor of terms and strategies that are not the most advantageous to payers and members.

As independent administrators of pharmacy benefits solutions, PBOs provide payer-focused contract terms and targeted utilization management strategies that eliminate wasteful spending, promote the lowest cost drugs, and prioritize member safety.

Working in partnership with employee benefit consultants, PBOs take a consultative approach to managing pharmacy benefits by providing unbiased analyses and recommendations that put employers in a position to make the best decisions for a pharmacy plan.

Which employers are eligible to use a PBO?

Any self-funded employer who chooses to carve out their pharmacy benefits can leverage a PBO. Doing so will gain them access to:

  • Competitive pharmacy contract pricing and drug rebate terms that lead to the lowest net cost
  • Tailored clinical management programs to ensure appropriate prescription drug utilization
  • Direct member services and quality assurance

A PBO acts independently of the PBM and Big Pharma, creating a level playing field for plan sponsors regardless of size or industry, promoting access to affordable prescription drug benefits year-over-year, and advocating in the best economic and clinical interest of plan sponsors and their members.

What exactly does a PBO do for self-funded employers?

PBOs serve as a go-to pharmacy resource, helping to identify risks and proactively uncover substantial savings opportunities for their clients. As independent advisors and advocates, PBOs fill the gap in the market and provide greater transparency into each employer’s pharmacy arrangement, clinical programs, and performance.

Specialized Pharmacy Consultations and Recommendations

Benefit advisors help employers make the most informed decision possible to meet their pharmacy savings and access objectives. A PBO provides pharmacy benefit analyses, recommendations, and strategies tailored to each employers’ specific risk areas and business objectives.

Aggregate Purchasing Power for All

A PBO can provide market-leading purchasing power for all employers, regardless of size, to match that of the nation’s largest employer companies, enabling them to access the most competitive pricing and drug rebates each year.

Clinical Interventions from Pharmacy Experts

Pharmacists provide independent clinical oversight of each employer’s drug utilization trends. They review and manage the appropriateness of therapy and implement targeted clinical interventions with the goal of driving down overall healthcare costs and improving member safety.

Award-Winning Client and Member Service

Members receive personalized support via in-house, U.S.-based call centers, where representatives are empowered to resolve member issues to achieve the best possible solution, even if that solution involves multiple steps. Clients have dedicated support teams for ongoing plan management.

How do drug trends and costs, like expensive specialty medication, impact pharmacy benefits?

Prescribers, pharmacists, and PBMs are not responsible for sorting through information to determine whether a drug is necessary, safe, and cost-effective for a member or plan. While many prescription drugs brought to market represent medical breakthroughs and treatments, some simply do not. Drug manufacturers, prescribers, and PBMs each play their own distinct role in drug pricing and utilization, and none of these players are advocating in the best economic interest of plan sponsors.

Specialty medications can account for a significant portion of a pharmacy plan spend, even if only a single member is on the treatment. A single high-cost specialty medication can drive plan costs of more than $250K for a given member in a single year. It is also possible members may be prescribed a costly treatment for off-label purposes, or given a regimen that is clinically ineffective for their condition.

Implementing clinical oversight into utilization management—such as having a dedicated PharmD conduct thorough medical necessity reviews and suggestions for more effective, safer, or less expensive drugs—can significantly improve employee health and the bottom line.

Ready for a conversation with your benefit advisor on designing smarter and more transparent pharmacy benefits? Prepare with: Ask Your Benefit Advisor These 5 Questions Before Your Next Renewal.

Stay in the know!
Sign up to gain access to industry news and content updates.