Survey & Sample Series: Pharmacy Benefit Managers

Many employers turn to pharmacy benefit managers (PBMs) for assistance with management of drug benefit costs.

As part of its Survey & Sample Series, the International Foundation of Employee Benefit Plans conducted a survey on PBMs and the selection of them.

The majority (58%) of those who responded to the survey use a PBM to administer their prescription drug benefit plan. About a quarter of respondents (26%) rely on a health plan provider or carrier for this service, and even fewer (13%) use a pharmacy benefit administrator or third-party administrator.

The survey, administered in July 2006, is an attempt to better understand how PBMs are being used. The 163 responses, from Foundation members, represent corporations (53%), multiemployer trust funds (31%) and public employers (15%). The published results include eight sample requests for proposal that were used by plan sponsors to aid in PBM selection.

• Satisfaction With PBMs: A significant majority (89%) of respondents who use PBMs are satisfied (66%) or very satisfied (23%) with their current PBM. Only 11% are dissatisfied or very dissatisfied with their PBM. Twelve percent of respondents are in the process of looking for a new PBM, and 14% plan to change vendors within the next 12 months. As expected, none of those who are very satisfied with their PBM intend to change vendors; interestingly, 23% of those who said they are satisfied with their PBM are either in the process of looking for a new vendor (10%) or intend to do so in the next 12 months (13%).
• Contract Provisions: Most PBM-user contracts include financial and performance guarantees; contract provisions that require PBMs to pass through manufacturer rebates discounts, fees and other payments; the right to audit the PBM; and requirements for disclosure and transparency of PBM prices and payments received.
• Use of Consultants: Sixty-four percent of PBM-user respondents also use a PBM consultant. Among other functions, 87% of those who use consultants get help in identifying possible PBM candidates and receiving and analyzing RFPs.
• Cost-Containment Techniques: Ranked by percent of respondents who use them, the most popular cost-cutting techniques are use of mail-order drug services (87%); use of drug formularies (79%); mandating or promoting generic drug use (79%); and having three or more tiers for cost-sharing devices, such as deductibles, coinsurance and copayments (76%).

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