Frequently Asked Questions
In the changing healthcare landscape, understanding the fine details of pharmacy benefits is critical for stakeholders ranging from healthcare industry professionals to consumers. The frequently asked questions below are provided to answer common questions, shed light on industry practices, and provide insight into the dynamic world of pharmacy benefit management. Whether you are a seasoned professional or a curious newcomer, let SlateRx help you navigate the complexities of pharmacy benefits.
What is a PBX?
SlateRx is the industry’s first PBX—pharmacy benefit experience. A PBX delivers the financial value of a pharmacy benefit manager (PBM) and pairs it with the concierge service of a pharmacy benefit administrator (PBA). This gives plan sponsors the best of both pharmacy worlds and offers control, flexibility, and substantial savings.
What is the difference between a PBM and a PBA?
A Pharmacy Benefit Manager (PBM) is a third-party entity that manages prescription drug benefits on behalf of health insurance plans, employers, or government programs. PBMs play a pivotal role in the healthcare system by processing and administering prescription drug claims, negotiating drug prices with manufacturers, establishing and managing formularies, implementing cost-containment strategies, and providing other services related to pharmacy benefits. PBMs aim to optimize the cost and effectiveness of prescription drug coverage.
A Pharmacy Benefit Administrator (PBA) refers to an entity responsible for the administrative aspects of pharmacy benefits within a healthcare organization. This might include overseeing the day-to-day operations of the pharmacy benefit program, ensuring compliance with regulations, managing relationships with pharmacies and drug manufacturers, and handling the administrative aspects of drug utilization.
What does “carve out” mean and why does it matter?
Carving out the pharmacy benefit refers to the practice of separating or outsourcing the management of pharmacy benefits from the health plan.
When a company decides to carve out the pharmacy benefit, it means that instead of including pharmacy services as part of the medical benefit/health plan, they contract with another partner to administer and manage the pharmacy benefit separately.
This decision allows for specialized expertise in managing pharmacy benefits and can lead to cost savings and improved efficiency if the right vendor is chosen. By carving out the pharmacy benefit, the company can rely on the partner with pharmacy expertise to handle the complexities of the changing pharmacy landscape.
Carving out the pharmacy benefit can provide more control, flexibility, and overall effectiveness of the pharmacy benefit.
What does full transparency around rebates really mean?
Full transparency means you get visibility into the collection of all monies your pharmacy partner has received from pharmaceutical manufacturers. This includes, traditional rebates, manufacturer admin fees, price protection payments, and data fees.
How/where do PBMs make money?
Typically, the answer to this question is….everywhere. The reality is that PBMs earn money in many different ways and the money moves around between many sources. Revenue can come from retail, mail order, and specialty pharmacies, from both the ‘front end’ (spread pricing, dispensing spread, DIR fees, MAC list maneuvering, etc.) and from the ‘back end’ (manufacturer rebates, manufacturer admin fees, timing of cash flow, etc.).
One of the biggest issues with this is a lack of disclosure or transparency. This can lead to misalignment of incentives, or your PBM making money you aren’t aware of when certain drugs are filled. You should know what you’re paying for and how your pharmacy partner or PBM is being paid. Ask the questions, be vigilant, hold your vendors accountable, and look for a truly transparent partnership. It’s your money and your pharmacy partner should be spending it as if it were their own.
What is “pass-through”?
Pass-through refers to refers to a pricing model where the pharmacy partner passes through all rebates and compensation without additional markups or spread pricing.
What is a formulary and why do we need one?
A formulary is a list of prescription drugs that are covered by a health insurance plan or pharmacy benefit. Formularies are developed to control costs and ensure the availability of effective and affordable medications. Formularies play a critical role in providing optimal value to both members and plans. At SlateRx, our formularies are developed based on sound clinical principles, prioritizing safety, and efficacy, and are grounded in achieving the best value for the plan sponsor while upholding the highest standards of clinical care.
What are specialty drugs?
Specialty medications are typically used to treat complex, chronic, or rare medical conditions. These medications are often high-cost, may require special handling or administration, and may require ongoing management. Some examples of conditions treated with specialty drugs are: multiple sclerosis, certain types of cancer, autoimmune disorders, hepatitis C or rare genetic conditions. For many plans, specialty drugs now make up approximately 50% of drug spend, even though they are used by very few members. For this reason, specialty drugs are monitored closely for appropriate use, adherence, and waste. Your pharmacy partner should have clinical programs in place to help the plan and member manage specialty drugs and their cost.
Don’t all pharmacy vendors just provide the same service—adjudicating Rx claims?
Not all pharmacy partners are created equal. While any PBM will adjudicate claims for prescription drugs, the details in the deal and clinical management matter—a lot. From contracting and definitions, to formulary, to clinical programs and member education, your pharmacy partner can manage your drug spend very differently with very different outcomes. And because SlateRx is a PBX, we can bring you the value of both a PBM and a PBA.
