How PBM’s Control Formularies and Affect Market Pricing

How PBM’s Control Formularies and Affect Market Pricing

How PBM’s Control Formularies and Affect Market Pricing

Independent Pharmacies at a Disadvantage

As you all know, Formularies are lists of drugs that are preferred by a health plan or employer. ‘Closed’ formularies are lists of drugs that are available for coverage by the organization. Coverage for medications not on the list may be available only if the physician believes that the drug is clearly preferable and obtains a waiver” (Huskamp, Epstein, & Bluementhal, 2003).

Financial incentives can be offered to physicians and patients for prescribing and taking medications, respectively, that are on the formulary (Huskamp, Epstein, & Bluementhal, 2003). Is this ethical? How does this affect independent pharmacies that have no say in what medications are offered? It puts independent pharmacies at a disadvantage and unfairly dictates what medications they sell and the high prices they have to pay to stock those medications.

Negative Reimbursements

We won’t even get started on the topic of negative reimbursements and a PBM’s role in that process. Or lack of… But since we know you are thinking about it we have to at the very least mention it. We have posted blogs about the frustrations of PBMs and negative reimbursements. Keep in mind that is one way Trxade can save you a lot of money. Review the drugs you are getting negative reimbursements on now and comparison shop on Trxade.

If you could buy the drugs you get negative reimbursements on cheaper, you would right? We all would… That is one major way Trxade helps Independent Pharmacies thrive. If you have a minute watch this quick testimonial from Shellman Pharmacy in Georgia addressing this very issue where they are now seeing PROFITS on drugs they were getting negative reimbursements on by using Trxade.

What Do You Think?

How sufficient is this process? Can we trust big PBM’s to do what is best for us, our patients, and our businesses? What do you think is their main driver in including a medication on the formulary… Money, or the health of the patient? I don’t know about you, but I’d be curious to see what incentives they receive.

How Do PBM’s Determine What Medications Are Listed on the Formulary?

Formularies are just one way that Pharmacy Benefit Managers (PBM’s) control and manage drug benefits for insurance companies. After a drug has been approved by the U.S Food and Drug Administration (FDA) PBM’s then follow a multi-step process to determine what medications are listed on the formulary.

One large PBM follows a 3-step process:

  1. The first step is to evaluate the safety, dosage, and effectiveness of a medication, taking into account the negative side effects.
  2. The second step is to review the findings in the first step and compare cost with other clinically comparable drugs.
  3. The last step is to review the findings from the first two steps, decide whether the drug will be listed on the formulary, and if so, determine what tier the drug will be placed in. (


Huskamp, H., Epstein, A., & Bluementhal, D. (2003). The impact of a national drug formulary on prices, market share, and spending: lessons for Medicare? Health Affairs, 22 (3), 149-158. Retrieved from:

Primary Medication Compliance

Stay Ahead of the Game of Primary Medication Non-Adherence Measurements

Quality Metric of Measurement for Non-Compliance Rates

Non-compliance is a known issue in the pharmacy world. For example in a study done by Schousboe, Dowd, Davison, & Kane (2010) about non-compliance among patients taking a fracture-prevention medication, only 30%-60% of patients taking this medication were still taking it a year later. This non-compliance can land patients in the hospital with fractures and other injuries. What can we do to prevent these hospitalizations and non-compliance?

The Pharmacy Quality Alliance (PQA) developed a quality metric of measurement for non-compliance rates. This non-compliance is referred to as Primary Medication Non-Adherence (PMN). The Proportion-of-Days Covered (PDC) metric stats are based on claims data that looks at the number of pills a patient has from one fill to the next refill and compares this to the days the patient should actually be on the medication. This has created a rapidly growing force that is creating IT tools to track patient-by-patient non-compliance.

Independent Pharmacies at the Forefront

This metric will be used in our community-based, independent pharmacies first, and is expected to grow to PBM’s. The drawback to this metric is that it can only be calculated after two fills. The patient must fill the RX once, and then come back for a refill. This excludes the “first fill factor”. An example of this is when a patient is prescribed an antibiotic for a bacterial infection, but they do not take the entire amount prescribed. This can result in a relapse for the patient and more treatment.


The PMN metrics are now focusing on certain target medications that treat chronic conditions and they are tracking this information via e-prescriptions. This could result in an increase in incentives of e-prescriptions and other preventive measures that could be taken to avoid non-compliance. There are several proposed interventions and research shows that non-compliance can be reduced by patient education done by pharmacists. “These interventions include an array of medication management services that providers, pharmacies, and payers are increasingly offering to targeted patients.” (Adams, Hubbard, Stolpe, & Cranston, 2015).

Patient education can improve relationships between patients and pharmacy staff, and also reduce hurdles that patient’s face that can cause non-compliance.

References: Primary Medication Non-Adherence Measurements
Adams, A., Hubbard, T., Stolpe, S., & Cranston, L. (2015). The first fill factor: a threat to outcomes, quality, and payment goals. Project HOPE. Retrieved from Schousboe, J., Dowd, B., Davison, M., & Kane, R. (2010). Association of medication attitudes with non-persistence and non-compliance with medication to prevent fractures. Osteoporosis International, 21 (11), 1899-1909. DOI: 10.1007/s00198-009-1141-5.

New Member Video Testimonial

Courtney with Shellman Drug Co Pharmacy | Shellman, GA 39886

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