As the pharmacy benefits management (PBM) industry has become increasingly consolidated, entering into a pharmacy network agreement becomes increasingly challenging for pharmacies, especially independent pharmacies that lack the volume of their large chain competitors. The top three PBMs – Caremark (CVS Health), Evernorth/Express Scripts (Cigna), and OptumRx (United Healthcare) control 79% of total prescription claims managed. The next top three PBMs – Humana Pharmacy Solutions, Prime Therapeutics/Magellan Rx, and MedImpact control 17% of total prescription claims managed. This leaves just 4% of the market share managed by all other independent PBMs (and cash pay).1 While challenging, there are still inroads to PBM networks, and this article discusses these considerations.
Approximately half of all states in the United States have some variation of Any Willing Provider (AWP) regulations for fully insured plan sponsors/payers. It is important to understand that AWP laws require fully insured/ managed care plans to accept any qualified provider who is willing to accept the terms and conditions of that pharmacy benefit plan. The pharmacy, particularly an independent or small chain with relatively low volumes, will typically not have the opportunity to negotiate more favorable terms and conditions or drug reimbursement levels.
PSAOs are the typical option for retail pharmacy PBM network inclusion; however, the contract terms can be disadvantageous from a reimbursement or preferred status standpoint. Specialty pharmacies are not typically included in PSAO-negotiated PBM arrangements.
One way to potentially tip the scale in a pharmacy’s favor is to differentiate as a specialty pharmacy, specifically if the pharmacy can focus on value-added clinical programs (e.g. utilization management, outcomes based, etc.). Hospital pharmacies that service the specialty prescription needs of outpatients of 340B covered entities may find it worthwhile to gain entry to PBM networks, instead of contracting this function out.
Entering Medicaid networks requires a state-by-state approach. Just because your pharmacy may contract with a PBM that services managed Medicaid or Fee-For-Service (FFS) Medicaid plans, your pharmacy will not automatically gain entry into these networks.
With so many considerations that can impact a pharmacy’s network strategy, it is helpful to start with a clear understanding of your pharmacy’s product and payer mix. With this in mind, the pharmacy is positioned to consider focusing their efforts on certain products and/or payers (e.g., commercial vs. government).
PHSL can serve as your resource, assisting with opportunity identification or helping to develop a specific network entry strategy.
1 Drug Channels, May 23, 2023. https://www.drugchannels.net/2023/05/the-top-pharmacy-benefit-managers-of.html
Posted January 26, 2024
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