For years, pharmacy benefits managers (PBMs) were left alone to oversee every part of a pharmacy benefits plan from behind the scenes. Without close oversight, PBMs manipulate pricing, contract terms, formularies, and pharmacy sourcing to their benefit. Fortunately, with recent changes to pharmacy regulation, PBMs are now under fire to answer for their many conflicts of interest and financial incentives they use to pad their bottom line. As a result, more self-insured employers and brokers are evaluating their contracts for these issues and exploring new options to protect the best interests of their plans.
Spotting the Gaps in Traditional PBM Models
Traditional PBMs, including the “Big Three”, have long been criticized for severely inflating the costs of prescription drugs and embedding conflicts of interest throughout the entire benefit. Boiling it down, these are the top three challenges we see in the traditional model:
Opaque pricing and rebates. Despite negotiating rebates and discounts with manufacturers, PBMs often pass little to none of these savings to the plan. Complex rebate structures and a lack of transparency about rebate distribution ultimately lead to consistent price hikes for needed prescription drugs, leaving plan sponsors unaware if their rebates are being used to lower pharmacy spend or funneled into PBM profits.
Spread pricing. The traditional PBM model often generates gaps in what the PBM charges the plan for a certain medication and how it reimburses the pharmacy — with the PBM extracting profits from the difference, or spread, between those two numbers. This hidden source of revenue can skyrocket drug costs and degrade plan value.
Lack of transparency. PBMs are notorious for a lack of transparency in how they manage a plan’s pharmacy benefit. This includes limited access to data around drug pricing, rebate distribution, and the fees included in the PBM contract. By keeping this data behind closed doors, traditional PBMs are not held accountable for how they manage pharmacy costs.
How a Fiduciary Partner Closes the Gaps
Standing in direct opposition to a traditional PBM is a fiduciary partner — a different type of PBM that is now a requirement for self-insured employers, per the Consolidated Appropriations Act of 2021.1 The fiduciary PBM model represents a fundamental shift in pharmacy benefits administration, shifting the focus from maximizing PBM profits to optimizing client outcomes, both clinically and financially, by:
Prioritizing plan interests. By definition, a fiduciary must hold a deep commitment to promoting the best interests of the plan only. Unlike traditional PBMs, fiduciaries align their solutions with the goals of each employer, eliminating conflicting incentives due to rebates, spread pricing, and other sources of hidden revenue. A fiduciary’s formulary management strategies are solely based on clinical efficacy and cost-effectiveness, ensuring that the best interests of the plan sponsor and enrollees are always top of mind.
Ensuring cost transparency. Instead of keeping employers away from their utilization data, fiduciaries disclose all costs associated with managing the entire pharmacy benefit. Employers receive regular, detailed information about what the plan paid for each medication, including how manufacturer rebates and PBM fees were used. By providing 100% transparency, fiduciary PBMs help plan sponsors understand exactly how plan assets are utilized, helping employers budget accurately and make informed decisions to enhance plan value.
Delivering equitable benefits. Prioritizing the best interests of the plan with complete transparency naturally provides equitable benefits to each enrollee. By focusing on how to best meet clinical needs with cost-effective practices, fiduciary PBMs help plan sponsors make needed medical therapies affordable and accessible to their enrollees, driving better outcomes at a lower cost. This patient-centric approach not only enhances quality of care but also drives consistent, measurable reductions in pharmacy spend.
Fiduciary pharmacy benefits organization US-Rx Care is proud to announce the addition of GoodRx to its national pharmacy network. GoodRx is one of the nation’s most recognizable providers of “cash discount” prices on prescription medications, used by millions of individuals throughout the U.S. annually. This relationship augments US-Rx Care’s own network pharmacy contracts to access GoodRx discounts in the event that the GoodRx price is better for a given drug on a given day at a particular pharmacy. This helps self-insured employers strengthen overall benefit value and provides the best possible care to their enrollees.
This unique savings opportunity automatically checks the GoodRx “cash price” discounts at the point of dispensing. Instead of searching on their own for additional savings through GoodRx, plan members can simply present their US-Rx Care health benefits card to the pharmacy, which will compare the US-Rx Care network rate with the GoodRx cash price. The member will always pay the lower amount and earn credit towards their deductibles and out-of-pocket maximums with no paperwork or reimbursement forms to submit. Through this integrated approach, US-Rx Care and GoodRx are working side-by-side to deliver the savings and quality of care that employers and enrollees both expect and deserve.
“As a fiduciary PBM, US-Rx Care puts the best interest of employers and their plan enrollees ahead of anything else,” said Renzo Luzzatti, US-Rx Care Founder and President. “By partnering with GoodRx, we continue to deliver on our fiduciary responsibilities by making it simple for employers to avoid conflicts of interest in their pharmacy plans and drive greater value for their plan enrollees.”
US-Rx Care maintains full contractual adherence to fiduciary duties, ensuring employers with self-sponsored health plans reduce wasteful spending and provide needed medical therapies to their plan members at the most affordable cost. Together, US-Rx Care and GoodRx are committed to enhancing price transparency and increasing flexibility for employer-sponsored pharmacy benefits. By eliminating hidden profits and deconflicting the complex processes within pharmacy benefits management, these two organizations now offer a more cost-effective, clinically responsible, and high-value pharmacy benefits solution.
About US-Rx Care
US-Rx Care is a fiduciary pharmacy benefits organization. We grew up in the health plan environment, working for and consulting to multiple Medicare, Medicaid, and commercial health insurers for over thirty years. At US-Rx Care, clients have access to proven pharmacy risk management programs and solutions that have consistently delivered 30%-50% reductions or more in pharmacy benefit spend for at-risk health plan sponsors. We have also assisted multiple plans achieve dramatic increases in HEDIS / Stars quality scores despite ever increasing thresholds to achieve a 5 star rating.
Building a high-value benefits plan is crucial for self-insured employers to control costs while improving employee satisfaction. However, this is easier said than done on the pharmacy side of healthcare benefits, as prescription drug costs continue to rise in response to a myriad of factors, including inflationary pressures, utilization, and, most notably, the conflicted PBM relationship characterized by hidden profits at the expense of plan sponsors and enrollees.1
Employers who self-sponsor their health plans take a front seat in their pharmacy benefit plan decisions, but selecting the right solution can be challenging due to binding contract terms and a lack of transparency from PBMs. That’s why clinical pharmacy organizations like US-Rx Care provide more than one option, allowing employers to choose the solution that best fits their needs while providing the highest value possible — whether it’s full pharmacy benefits management or behind-the-scenes utilization management.
Piece-Meal or Full-Service: Evaluating Pharmacy Benefits Solutions
Selecting the right pharmacy benefits solution depends on a number of factors, including existing vendor relationships, financial considerations, and overall goals for your pharmacy plan. Self-insured employers can select one of these two solutions:
Pharmacy benefits management. The full PBM model encompasses every service that touches the pharmacy benefit, including formulary management, claims processing, pharmacy network management, medication management, and specialty pharmacy services. This comprehensive approach provides an all-in-one solution to help employers streamline pharmacy benefits administration by keeping all prescription drug information in one place.
Utilization management. Instead of an all-inclusive solution, employers can leverage utilization management to establish a stronger clinical backbone within their existing PBM relationship. This solution focuses entirely on reviewing prescription drug claims through a clinical lens, with a team of healthcare professionals working to ensure members receive the best possible medication at the lowest available price. By targeting utilization patterns and promoting cost-effective prescribing practices, this solution aims to control pharmacy costs while ensuring appropriate medication utilization.
Maximize Savings and Satisfaction With a Fiduciary Partner
Despite best appearances, a PBM or utilization management organization will fail to provide optimal savings if they do not contractually adhere to fiduciary responsibilities — the same standards that self-insured employers are required to follow. A fiduciary partner like US-Rx Care can fundamentally transform an employer’s pharmacy benefit plan, leveraging a PBM or utilization management solution to unlock higher value and deliver maximum savings for both the plan and its enrollees.
The core difference between traditional and fiduciary PBMs is the ultimate goal of their efforts. Where traditional PBMs notoriously seek opportunities for profit, a fiduciary only works in the plan’s best interest, operating with full price transparency and eliminating every conflict of interest. By removing hidden profits from the equation, fiduciaries can negotiate lower prices, optimize formularies to only include the appropriate medications, and implement cost-saving strategies tailored to each employer’s plan needs.
Choose the PBM That Works For, Not Against, Your Plan
As a leader in the fiduciary PBM space, US-Rx Care has the clinical and pharmacy benefit administration expertise necessary to sharply cut the costs of needed prescription drugs. Our full PBM solution is proven to save up to 50% on pharmacy benefit costs in just 12 months for self-insured employers. Alternatively, employers who wish to keep their PBMs can carve out utilization management and prior authorization functions to our clinically-based Right Rx program. By advocating strictly for your enrollee’s best interest, Right Rx saves an average of $15-$25 per enrollee per month with over 30% or greater out-of-pocket savings for non-specialty, specialty, and J-code prescription drugs. Whether your organization is looking for partial or full pharmacy optimization, US-Rx Care has the tools and cost-saving frameworks in place to deliver the savings and plan value your enrollees deserve.
Diabetes remains a leading chronic condition impacting over 38 million people in the United States — over 11% of the population.1 Due to a myriad of lifestyle, environmental, and genetic factors, the prevalence rate is expected to continue its upward spiral, with more than one million new cases per year through 2030. As the healthcare spotlight continues to shine on diabetes management, self-insured employers will grow increasingly responsible for bearing the financial burden of this complex, chronic, and costly condition.
A Widespread and Growing Concern for Self-insured Employers
While the current prevalence rate is substantial, we can expect numbers to skyrocket in coming years, as one in three Americans are prediabetic and likely to develop type 2 diabetes, in conjunction with other life-threatening diseases such as heart disease and stroke.2 Only 1.7 million out of the 38 million diabetics have type 1, signaling the primary role of obesity in the onset of diabetes.1 Looking at current statistics for obesity, we can predict a corresponding increase in the number of diabetes cases if obesity is left untreated:
Nearly 42% of adults and 20% of children and adolescents are obese.3,4
From 1999-2000 to 2017-2020, the adult obesity rate increased by 37%.5
From 1999-2000 to 2017-2020, youth obesity increased by 42%.5
With the growing number of individuals who need medical management for diabetes, new treatments have quickly emerged to manage blood sugar more effectively and help patients achieve an improved state of health — with the added benefit of significant weight loss.
Emerging Treatments for a Complex Condition
Insulin is the long-standing treatment for an estimated 27% of diabetics, most of whom have type 1.6 However, type 2 diabetics often need additional or alternative treatment. The standard medication therapy typically starts with Metformin, along with diet and exercise modifications. If Metformin alone at optimal dosing is ineffective, Sulfonylureas (Glipizide) or Thiazolidinedione (Pioglitazone) may be added to the treatment protocol. The goal is to reduce Hemoglobin A1c (HbA1c) levels, a standardized metric for blood sugar levels, to below the diabetic range (6.4% and above).
If these initial therapies are in place for at least three months and fail to lower HbA1c below 6.4%, patients can begin taking glucagon-like peptide-1 receptor (GLP-1) agonists, such as Ozempic, Wegovy, or Mounjaro. GLP-1s are used to treat both type 2 diabetes and obesity by slowing the movement of food from the stomach to the small intestine, which reduces appetite and feelings of hunger. GLP-1s can be used with the maximum dose of Metformin when a patient is obese with type 2 diabetes. However, despite its proven efficacy in treating diabetes and obesity, not all GLP-1s are as effective as others and can cause serious side effects, including gastric stasis, pancreatitis, and, in rare cases, thyroid cancer.7
The Role of Financial Incentives in GLP-1 Treatment Trends
Despite the potentially dangerous side effects, GLP-1s have exploded in utilization in recent years, beginning with off-label use for weight loss and now through the FDA-approved Wegovy dosage designed for treating obesity. However, because generic versions of GLP-1s have yet to be approved, manufacturers and pharmacy benefit managers (PBMs) are taking full advantage of the opportunity to boost their margins for these popular brand-name medications.
GLP-1 manufacturers typically offer “Class of Trade” financial incentives, instead of rebates, to PBMs to ensure placement on the PBM’s formulary and to incent the dispensing of GLP-1s from the PBM’s mail-order pharmacy. These class of trade incentives have resulted in minimal clinical oversight required by the PBMs to approve the use of GLP-1s. In most cases, PBMs will give their stamp of approval if there is evidence of past or current treatment with Metformin — without investigating whether HbA1c levels indicate the existence of type 2 diabetes.
PBMs have struck gold with GLP-1s, as the combination of class of trade financial incentives with the highly sought-after weight loss effects has exponentially increased utilization and sales, with projections of over $71 billion by 2032, according to J.P. Morgan.8 However, by placing profit over outcomes, PBMs are to blame for the continual escalation of GLP-1 utilization and prices — without close consideration of if/how these medications will truly impact clinical outcomes.
Containing Costs With Fiduciary Utilization Management
Working in direct opposition to traditional PBMs, a fiduciary utilization management partner operates only in the best interests of the plan sponsor and its enrollees. By focusing on medical necessity and clinical rigor, a fiduciary clinical services program like US-Rx Care’s Right Rx service can generate substantial cost savings without compromising patient outcomes. Compared to the current “open floodgate” PBM model, proper GLP-1 utilization management should lead to 50% lower cost while enhancing the value and integrity of self-insured pharmacy benefits.
Weinger, K., & Beverly, E. A. (2010). Barriers to achieving glycemic targets: who omits insulin and why?. Diabetes care, 33(2), 450–452.
Lisco, G., De Tullio, A., Disoteo, O., Piazzolla, G., Guastamacchia, E., Sabbà, C., De Geronimo, V., Papini, E., & Triggiani, V. (2023). Glucagon-like peptide 1 receptor agonists and thyroid cancer: is it the time to be concerned?. Endocrine connections, 12(11), e230257.
Self-insured employers assume a measurable amount of risk when sponsoring their own health plans, yet this risk often pays off in the form of lower healthcare costs and consistent bottom-line savings. However, what many employers overlook is the new risks associated with fiduciary standards in pharmacy benefits management. Even though employers do not play a direct role in managing pharmacy benefits for their enrollees, they’re still on the line for a failure to uphold fiduciary responsibilities by partnering with the wrong pharmacy benefits manager (PBM).
The Critical Importance of Fiduciary Duties
Fiduciary requirements demand ethical and cost-effective pharmacy benefits management that prioritizes enrollees’ health and quality of life. This entails making clinically informed decisions, guaranteeing transparency around price and necessity, and diligently overseeing PBM activities to optimize both financial and health outcomes. Failure to uphold these duties puts self-insured employers at risk of:
Financial Losses. Overlooking fiduciary responsibilities opens the door to a host of financial risks that can strain employee budgets and employer bottom lines. The Employee Retirement Income Security Act of 1974 (ERISA) serves to protect plan sponsors and enrollees from wasteful spending, most notably in pharmacy benefits.1 Without proper oversight, PBMs engage in profit-driving practices that drive up prescription drug costs, resulting in excessive spending that undermines financial sustainability.
Legal Repercussions. Failure to fulfill fiduciary duties exposes plan sponsors to legal liabilities, as evidenced by the J&J class action lawsuit. By neglecting to negotiate drug costs with pharmacies in its enrollees’ best interests, J&J cost its employees millions of dollars in unnecessary pharmacy spend.2 For one multiple sclerosis drug that should cost an estimated $77 out of pocket, J&J’s plan paid an estimated $10,200 — a glaring example of heavily inflated pharmacy costs that enrollees should be protected from.2
Diminished Care Quality. Prioritizing profit over patient care in PBM arrangements directly opposes fiduciary responsibilities to work only in the best interests of the enrollee. When these duties are disregarded, PBMs inevitably redirect their focus to building hidden profits into contract terms — rather than finding new ways to optimize care. As a result, restrictive formularies and exorbitant prescription drug costs can lower the quality of care, leading to suboptimal health outcomes.
Loss of Trust From Plan Members. Neglecting fiduciary duties quickly erodes trust between employers and plan members. When employees perceive that their interests are not being prioritized — or protected, at the very least — they lose trust in their employers and begin to question their benefit integrity. This can substantially harm employee satisfaction, company morale, and retention, resulting in lower productivity and organizational performance.
Increased Regulatory Scrutiny. Regulatory bodies are on the lookout for self-insured employers who violate fiduciary standards — even when done unknowingly — and regularly conduct audits, impose penalties, and enforce stringent measures to root out and address non-compliance. These interventions not only disrupt operations and obstruct cash flow but also broadcast the plan sponsor’s lack of commitment to ethical benefits management.
Erosion of Employee Benefits. As healthcare costs continue to balloon, fiduciary standards play a larger role in safeguarding benefit integrity. Without these guardrails in place, plan sponsors may resort to cost-cutting measures that compromise the quality and accessibility of employee benefits, leading to poorer employee health and higher turnover rates.
How to Uphold Fiduciary Duties in Pharmacy Benefits Management
To mitigate each of these risks, self-insured employers must prioritize fiduciary oversight throughout PBM arrangements. This entails thoroughly vetting PBMs, insisting on price transparency and rebate arrangements, and conducting independent audits to assess performance and adherence to fiduciary standards. By working with a certified fiduciary pharmacy benefits manager like US-Rx Care, plan sponsors can bypass these risks and have complete peace of mind that their PBM is working in the best interests of the plan and every enrollee with aligned interests for the highest quality of care at the lowest possible cost.
Most health insurers plan to continue offering free preventative care services despite a federal judge having imposed a nationwide injunction on an Affordable Care Act requirement that these services are covered with no out-of-pocket costs on the part of patients, according to a letter by industry trade groups.
With concern growing that this important part of the ACA would suddenly be revoked, some of the nation’s largest insurers and industry trade associations penned a letter to lawmakers, stating that: “The overwhelming majority do not anticipate making changes to no-cost-share preventive services and do not expect disruptions in coverage of preventive care while the case proceeds through the courts.
“Our associations have long supported preventive care and continue to do so. By responding together, we wish to make clear our strong support for continued access to preventive health care for millions of Americans who rely on it. ”
Signatories to the letter include the Blue Cross Blue Shield Association, the American Benefits Council and America’s Health Insurance Plans.
The letter was written in response to Democrats on health committees in the U.S. Senate and House or Representatives asking for information from 12 of the nation’s largest health insurers on how they plan to respond to the decision by the U.S. District Court for the Northern District of Texas in Braidwood Management Inc. vs. Becerra.
That decision struck down the ACA requirement that most health plans and issuers cover without cost-sharing the more than 100 preventative services recommended by the U.S. Preventive Services Task Force (USPSTF).
The judge in the case reasoned that the ACA requirement to cover with no cost-sharing medications for HIV prevention violates the rights of the plaintiffs who have religious objections to these medicines. The order immediately blocked the requirement nationwide to cover not only the HIV-prevention medicines, but all preventative services recommended by the USPSTF.
The U.S. Department of Health and Human Services has appealed the decision to the U.S. Fifth District Circuit Court and the Justice Department has asked that the decision be paused as the appeal process plays out.
The lawmakers also asked if the insurance carriers would honor the ACA’s rules until all appeals are exhausted, including all the way to the U.S. Supreme Court.
Fallout from the ruling
The federal court’s decision has caused panic and concern among patients’ rights advocates that insurers would immediately stop covering these services, which have become an essential part of health care in the last decade.
If the ruling stands and survives appeals, insurers could impose deductibles and copays for potentially lifesaving screening tests.
The lawmakers on April 13 wrote in their letter to the insurance industry: “We are very concerned that the decision will unnecessarily cause confusion, force consumers to pay out-of-pocket, and result in patients foregoing preventive services screenings and treatment altogether. There is evidence that even modest cost-sharing deters patients from accessing care and exposure to cost-sharing reduces the use of preventive care.”
The trade associations that responded to the lawmakers’ request to continue honoring the ACA rules said that preventative care is popular and effective, and that the decision from the federal judge likely is just the start of a lengthy legal process.
If the decision were to stand, there are still some preventative screenings that are not covered by the ACA, and it would not affect all states. There are 15 states with laws requiring insurers to cover with no patient cost-sharing the same preventative services that the federal law requires.
