The way it works in America, most employers give total control of health care costs to their health insurers, hospitals, pharmacies, and the companies that manage their benefits. The costs are so dense that many employers don’t feel like they are equipped to sort through all of it, so they don’t. This failure to negotiate lower costs can partially explain why Americans pay some of the highest health care costs in the world. However, employers don’t have to be at the mercy of insurance companies and hospitals. They actually have the power to negotiate these costs in order to lower health care rates for employees. As drug costs rise, employees are left paying premium prices for their prescriptions. Here’s how employers can help by negotiating these rising costs with local pharmacies.
Pharmacy Benefit Managers (PBM’s) are third-party administrators who manage prescription drug plans for employers. These PBM’s negotiate with pharmaceutical manufacturers to set prices for drugs and they can also negotiate rebates for drugs. What this means for employers is that they should contact their local pharmacy and discuss options for using various PBM’s in order to find the PBM that is willing to give them the best deal on drug prices. Furthermore, employers should contact local pharmacies about rebate options. If a pharmacy wants to get the business of a particular PBM, they will negotiate rebate offers and discounts on certain drugs for employers.
Many PBM’s retain profits based on the drug prices they negotiate with the specific pharmacy. If an employer wants to get lower drug pricing from the pharmacy, they need to ask the pharmacy to shop PBM’s to get the lowest drug costs. Employers can also choose to exclude certain drugs from their health plan, unless the pharmacy can offer an acceptable price. This is a great negotiating tactic for employers because if the pharmacy isn’t selling certain drugs, they will be losing money. This is especially true with new drugs on the market. There is exponential pressure for pharmacies to sell these new drugs, but employers can set a rule that certain drugs would be excluded if their price exceeded a specified cost per quality adjusted life year. Therefore, it is in the best interest of the pharmacy to work a deal with employers so that employees continue purchasing these drugs from the pharmacy.
