Conduct A PBM RFP Guaranteed To Reduce & Control Your Costs

Unlike other consulting firms’ RFPs, our firm’s RFPs actually reduce our clients’ costs.

Why? Because other consulting firms conduct Questionnaire-focused RFPs, while our firm focuses on the two matters that actually drive up every Plan’s prescription coverage costs: The PBM contract, and the “mix” of drugs utilized by Plan beneficiaries.

Here’s how our firm conducts PBM RFPs: 

Step One: We Draft A Far Better PBM Contract. Before the RFP begins, we draft an entirely different PBM contract that eliminates all the “loopholes” that are stuffed in virtually all PBM-client contracts and that increase every Plan’s costs. We also include a unique combination of contract provisions that enable our clients to control their costs, including the following:

  • Airtight contract Definitions that prevent PBMs from shifting drugs between guarantees (making the guarantees worthless)
  • Pass-Through Pricing (not the usual “spread pricing” that allows PBMs to take “profit spreads” on every drug dispensed)
  • 15 price guarantees for retail, retail 90 and mail drugs (not the usual 12 guarantees)
  • More than 1,000 Minimum Discount Guarantees for every specialty drug (not the usual short list of guarantees that leave hundreds of specialty drugs without any price control)
  • An automatic “Default Discount Guarantee” that must be applied to every new specialty drug that the FDA approves (typically about 30 to 40 drugs annually, which also need “price controls” if a Plan is to control its costs)
  • A Pass-Through of all monies (not just “Rebates”) from all third parties (not just drug manufacturers)
  • 4 “Financial Benefit Guarantees” for each dispensed retail, retail 90, mail and specialty brand drug (not the usual 2 or 3 “Rebate Guarantees”)
  • A right to obtain “net cost” information (factoring in all passed-through rebates and other monies) – a unique provision that enables our clients to determine the actual cost of any drug and find out if their PBM is favoring higher-cost rather than lower-cost drugs
  • A right to customize the Formulary (rather than the typical contract that forces clients to rely on PBM’s standard Formularies)
  • A right to customize all Programs, including Prior Authorization, Step Therapy, Mandatory Generic and Quantity Limit Programs (rather than the typical contract that forces clients to rely on PBM’s standard Programs)
  • A right to renegotiate any specialty drug guarantee on a quarterly basis, and all retail, mail and Financial Benefit guarantees on an annual basis (rather than the typical contract that leaves clients “stuck” with the same contract terms for 3+ years)
  • A right to carve-out any specialty drug and have it dispensed from a lower-cost specialty drug pharmacy, if the PBM refuses to renegotiate specialty drug pricing in good faith
  • A right to obtain a complete set of claims data with each invoice (or the client need not pay the invoice)
  • A right to terminate the contract, with or without cause on 90 days notice (giving our clients the leverage to ensure ongoing appropriate services, and the flexibility to cancel the contract if and when our clients want to do so)

Step Two: We Perform A Claims Data Analysis & Make Recommendations On How Our Clients Can Reduce Their Costs. Before we issue the RFP, we also conduct a thorough claims data analysis to identify all high-cost drugs that are unnecessarily driving up our client’s costs. We then make recommendations to end coverage – or implement Programs – to control the use of those high-cost drugs. Thus, before the RFP is issued, we ensure that PBM contestants won’t win our client’s RFP by including high-cost drugs on the client’s Formulary and bidding high “Rebates” for drugs that shouldn’t even be dispensed. And we position our client to decrease costs by relying on lower-cost drugs as soon as our client’s new contract is implemented.

Step Three: We Bid Out Our Contract & Obtain PBM Responses. When we issue our RFP, we transmit our newly drafted contract to every PBM contestant, together with a list of drug exclusions and newly drafted customized Prior Authorizations. We require each PBM Contestant to review and mark-up our proposed contract, as well as fill in the 1,000+ “blanks” that will constitute the PBM contestant’s price guarantees.

Step Four: We Use the PBM’s Leverage to Extract the Best Possible Contract Terms. During the next several weeks, we analyze each contestant’s proposed contract. Then we conduct repeated conference call negotiations with each PBM contestant to use the RFP’s leverage to obtain stronger and stronger substantive contract terms – and pricing terms and guarantees. Contestants that have extensively marked up our proposed contract – or are offering weak contract terms – and won’t improve their proposals are eliminated from the RFP, leaving our clients with a few Semi-Finalists to evaluate.

Step Five: We Obtain Binding “Contract Offers”. Toward the end of our RFP, we conduct a final “live” negotiation with each PBM Semi-Finalist. After negotiations are completed, we incorporate the new concessions of each Semi-Finalist into its proposed contract and require each Semi-Finalist to execute the document as a binding “contract offer” that our client can accept and execute, should our client select the Semi-Finalist as its PBM.

Step Six: We Evaluate Semi-Finalists and Position Our Client To Select A Finalist. At the end of our RFPs, we provide a final financial evaluation to our client of each Semi-Finalist’s executed “contract offer”.  As a result, when our RFP concludes, all our client needs to do is review our analysis, select its Finalist and execute its already-negotiated binding contract offer. No further contract negotiations are necessary.

Guaranteed Savings. Because our RFPs use the leverage of the RFP to extract stronger and stronger contract terms – not responses to a Questionnaire – our RFPs result in:

  • Far stronger PBM contracts
  • Free of all loopholes that increase Plans’ costs
  • With a price “control” over the price of every drug dispensed
  • With 15 retail and mail price guarantees, and guarantees for every Specialty Drug (1,000+ drugs), and
  • Providing Plans with the ability to control their costs by customizing their Formulary and Programs, and
  • The ability to renegotiate and improve their pricing terms on a regular basis throughout the life of the contract, and
  • The ability to carve-out specialty drugs and have a lower-cost specialty pharmacy dispense certain drugs, if need be, to control the drugs’ costs, and with
  • The ultimate “leverage” that Plans need to control their costs, namely the right to terminate their contracts if and when they want to do so
  • Finally, when our clients conclude their RFPs and implement their new contracts, our clients have already eliminated coverage for many unnecessary high-cost drugs, and implemented a customized Formulary and customized Programs that will decrease their costs

Talk to any of our clients, and they’ll tell you our firm’s PBM RFPs work: They actually decrease and control our clients’ prescription coverage costs.