Tracking PBM billing practices for employer insurance plans

While there are a number of pharmacy benefit managers (PBMs) that pass the cost of drugs supplied to patients with near or full transparency to plan sponsors, most of the biggest PBMs do not: insurance plans get some assurance that costs are being controlled, but the actual drug costs are not known. Now, a Mequon, WI firm, Skygen USA, is opening a new subsidiary, Hylis Pharmacy Solutions, to uncover actual PBM costs for the benefit of plan sponsors.

“Spread pricing occurs when PBMs pay pharmacies one cost to dispense the prescriptions, and then bill plan sponsors at a margin greater than this rate,” says Greg Borca, CEO of Hylis Pharmacy Solutions. “The resulting additional profit-taking leads to increased costs for the self-insured plan sponsors or health plans.” He adds that there are seven to eight of these types of practices PBMs may use to inflate the average wholesale price; the spread is typically 10-20% of drug spend.

Hylis and Skygen say that they have access to over 100 million pharmacy benefit claims, and through a combination of automated claims review plus its team of industry analysts, Hylis will be able to demonstrate cost savings to plan sponsors. The company is putting its own skin in the game: payment for the analysis will be based on a percentage of the savings uncovered.

Hylis’ main client base is expected to be self-funded employer groups when the business is up and running in 2016; some early adopters are already showing promise, says Borca. And while the sponsor-PBM dynamic does not involve pharma manufacturers (who negotiate discounts and pricing agreemetns directly with the PBMs), there could be value in manufacturers understanding how their pricing translates into actual sponsor costs.