Summary of regulatory developments: Updates for March 2021
UK life insurance: Summary of regulatory developments for March
Prescription drug costs have increased dramatically in recent years with double-digit average wholesale price (AWP) inflation trends becoming common. Organizations offering Medicare Advantage prescription drug plans (MAPDs) and standalone prescription drug plans (PDPs) must look closely at all aspects of their pharmacy benefits in an effort to contain costs. One of the most important ways plan sponsors can lower pharmacy costs is to look for ways to improve their pharmacy benefit manager (PBM) contract. With 2018 Medicare bids due to be filed in a few months, now is an ideal time for plan sponsors to reevaluate their PBM contracts. In this article, we summarize the strategies that should be considered in any PBM contract negotiation.
PBM negotiations usually involve the following contractual provisions:
As contracting has become more complex, the following contract provisions are becoming more common as plan sponsors look to reduce their pharmacy expenses.
As the PBM contracting process continues to evolve, plan sponsors also need to consider the effects their PBM decisions can have on their plans.
As the prescription drug industry continues to evolve, plan sponsors need to continually evaluate and update their PBM contracts to adjust to the changing environment.
Michael J. Polakowski, MAAA, FSA, is a consulting actuary with the Seattle office of Milliman. Contact him at firstname.lastname@example.org.
Nicholas Johnson, FSA, MAAA, is a consulting actuary with the Seattle office of Milliman. Contact him at email@example.com.
Todd M. Wanta, FSA, MAAA, is a consulting actuary with the Brookfield office of Milliman. Contact him at firstname.lastname@example.org.