Tag Archives: pbm selection

Which PBM is Best?

This is one of the most common questions that empowered[1] self-funded plan sponsors ask when laying out their benefits strategy.  As with other financial vendor questions (e.g.  “Which credit card is best?”), the answer depends a little what you need and how you use it.  However, I can give you some fantastic advice about how to compare them.  What follows is a rough sketch of some benefits of three important PBMs and how they might be able to help your self-funded plan operate better and save money.  This is not meant to be comprehensive, and is meant to be mostly unbiased (disclosures at bottom).[2]

CVS Caremark: Caremark is currently the second largest PBM in the country.  Its main differentiator is that it owns the CVS drugstores, and this is a huge differentiator.  Here’s why: for all plans, chronic illnesses are the top source of cost, and the best answer to this cost is getting your members (1) on mail order drugs and (2) ensuring they take these drugs.  CVS’ abundant drugstores allow your members to get mail order pricing in person to pick up their drugs at any CVS location, which provides choice about how to obtain the meds while maintaining the lower cost to your plan.  Lots of people like to pick up medicine in person, and it’s faster.

Furthermore, every year more of these locations add Minute Clinic operations, which can save your plan a ton by allowing your members to get prescriptions and see physicians at the same location.  CVS is also working to get these physicians and pharmacists tapped in to your members and their pharmaceutical needs to drive up consulting, education, and adherence.

Bottom Line: Caremark could be a great bet for your plan and members if you are in an area with many CVS drugstores and clinics, especially if you have a lot of members with mail order prescriptions.

Express Scripts: When Express Scripts (ESI) bought MedCo, it became the largest PBM in the country.  The combined company is very good at research and outcomes and offers a lot of services that could benefit your plan.  I’ll discuss the ones most interesting to me.  First, they have research centers where pharmacists specialize in a few of the most high-impact positions.  These specialty research centers audit all the claims that are coming through and find gaps and opportunities, and will reach out to your members to correct them, improving adherence and removing waste.

Another area is catching fraud, waste and abuse, specifically with drug abuse.  Claims data files through databases that check the drugs prescribed against what should be expected, looking especially at high street value and addictive drugs, and then puts the information in the plan’s hands and cuts off the members’ ability to abuse the system.

ESI has also negotiated a preferred network of pharmacies that, if used by the members, will deliver focused plan savings, and is a wider network than just using one brand.

Bottom Line: ESI is a thorough PBM option that is exceptionally clinically strong, which helps address adherence issues, treatment gaps, and drug abuse.  They have great discounts, as well.

Navitus: The Navitus name is almost synonymous with the innovation of transparent PBM pricing, which is a solid trend that has increased steadily in recent years.  The Navitus transparency model operates by allowing plans to pay a flat fee per month in exchange for (1) full rebates, (2) no spread or margin paid to the PBM on pharmacy claims, and (3) fee transparency paid to external parties.

It is challenging to directly compare the Navitus cost against the traditional PBM cost, but results suggest the cost savings could be significant because groups recapture money from so many areas.  It is virtually certain that the discounts negotiated by Navitus with the pharmacies are lower than are negotiated by the other PBMs.  Nevertheless, because Navitus does not mark up the discounted price with a spread, it is likely that the group will pay less per scrip than they would with a larger PBM in many, if not the majority, of cases.  Furthermore, a plan will be able to see exactly what the cost structure looks like and will be able to more easily track all its expenditures with the transparent model.

Bottom Line: Navitus may or may not be the lowest overall cost of the PBM options, but you know exactly what you are paying them and where your dollars are going, which is empowering for good decision making.

In summary, this is a very quick and rough assessment of three multibillion-dollar companies, and represents this author’s opinion of the respective strengths of each when you hire them for your members and your plan.  Any time you are bidding, ensure you (1) know your plan’s greatest weakness on the pharmacy side, and (2) interview each of them (and others) with these needs specifically in mind to see who offers the most for your plan.


[1] Empowered plan sponsors are those who have the option in their self-funding arrangement of choosing a PBM.  If you are a plan sponsor who is being prevented from selecting a PBM of your choice, you may want to consider a new arrangement, working with an unbundled TPA instead of a fully bundled arrangement.

[2] I gained this information from Caremark at a free lunch meeting, from ESI at a free conference, and from Navitus on a conference call.  There was no payment for writing this article and no commission or fee paid to anyone who uses these services.  At the time of this writing, none of these companies sponsor Benefits Strategy, either.