Prescription drug coverage is one of the most highly valued employer-sponsored benefits used to attract and retain employees, yet it is one of the most elusive and complex purchasing responsibilities of self-insured employers. Few corporate human resource departments have in-house subject matter expertise to evaluate competing vendors. And few in-house corporate counsel possess the substantive and practical knowledge to avoid contractual mistakes when executing multi-year contracts with savvy PBM providers.

In order to make informed purchasing decisions, employers must be savvy to the shell games that have developed over the last dozen years. PBM financial terms are analogous to a balloon, if you squeeze the left side of the balloon, the right side becomes larger. Thus, what adds to the complexity of PBM pricing is the interactivity of discounts, dispensing fees, generic drug effective rates, POS administrative fees and manufacturer rebates. A simple tweak to one or more of these moving parts has a material impact on the cost of an employer’s prescription drug program. Add in the leverage of a coalition of employers, and PBM providers become very creative with the moving parts, thereby generating greater value to purchasers.

Corporate United’s
Approach to Sourcing PBM

By conducting a sourcing process led by one of the nation’s top PBM consultants and through the collaboration of benefits and contracting professionals across leading organizations, Corporate United is able to leverage literally hundreds of years of combined experience in the category. This results in the most comprehensive approach possible, including best-in-class RFIs, RFPs and negotiation strategies.

Corporate United members have the option to commit their volume to the sourcing initiative, but are not required to serve on the committee. For those members willing to commit their business and who also want to be involved with key aspects of the process, we recommend serving on the sourcing committee. The committee works closely with our consultant throughout the sourcing process.

Whether a company is contributing its spend or serving on the committee, it is essential they are truly prepared to commit their volume to the effort. In doing so, a member company agrees to pledge its business’ spend to the supplier that the committee deems will present the most value to the group by virtue of the evidence gathered in the sourcing process.

This simple point is the key to the success of the sourcing initiative. By representing committed volumes to the supply base, Corporate United is able to drive results that cannot be duplicated on an individual basis; however, the commitment has to be genuine in order to drive competitive behavior in the market.

Corporate United’s
PBM Sourcing Timeline

Over the course of the next 10-12 months, Corporate United will be preparing for and going to market to develop a best-in-class PBM agreement. The key elements of the timeline are listed below;

January 1^st, 2011: Contract go-live

Learn More and Get Involved
Please visit: http://www.corporateunited.com/PBM_sourcing_initiative.aspx to see the complete PBM sourcing initiative brochure, which includes additional details on the current state of the industry, member participation, FAQs and more.