46% of Health Plans Say PBMs Should Do More, Evergreen Re Survey Finds

Stuart, FL April 20, 2004 - At a time when many health plans across the country are questioning some of the practices of their PBM (pharmacy benefit manager), a recent survey of health plans indicates that almost half believe their PBMs should be doing more to help them manage pharmacy exposure. Two-thirds of those participating in the online survey say they are protecting themselves by conducting audits of their PBM to verify their cost-effectiveness.

Evergreen Re, one of the nation's leading healthcare reinsurance brokers, surveyed 50 regional health plans about their pharmacy cost trends and their experiences with PBMs -- the intermediaries between the drug makers and pharmacies and the health plan or employer paying for the drugs.

"While health plans we surveyed are generally satisfied with the services of their PBMs, there is clearly a concern about verifying the claimed financial results," said Charles Crispin, president, Evergreen Re.

The survey comes amid signs that larger health plans are growing dissatisfied with their PBMs, an industry that currently controls 70 % of all consumer prescription drug purchases and handle more than $100 billion worth of prescription drugs annually. A growing number of health insurers have expressed concern that PBMs are overcharging health insurers and self-insured health plans.

Crispin noted that PBMs have many effective techniques for controlling drugs costs. However due to the competitive nature of their industry and the possibility these techniques may be enriching their bottom line, PBMs rarely share these methods or their dollar value with clients. "Audits enable health plans and employers to identify their PBM's cost control mechanisms and to make sure contract terms are being carried out and fully understood," Crispin added.

The Evergreen Re survey also found that more than 60% of health plans reported an annual drug cost trend of 9-15%, while 30% are struggling with cost increases of 16-20%. Of those surveyed, only eight plans are experiencing a drug cost trend of 8 per cent or less.