Five Metrics to Evaluate Pharmacy Contract Performance
Brokers can evaluate pharmacy contract performance by monitoring several key performance indicators (KPIs) and assessing how well the contract meets clients’ needs. Below are five metrics that brokers should use to evaluate contract performance:
- Review contract guarantees: Brokers should compare contract guarantees to what the plan received to evaluate if contract discounts are being met. Drug-level evaluation of specialty drug guarantees is essential, as specialty costs often make up most of plan spend. By evaluating guarantees, brokers can better negotiate with the pharmacy benefit manager (PBM) to ensure their clients receive the best possible rates.
- AWP Mismatch: Average Wholesale Price (AWP) is the standard price of a prescription drug from varying pricing sources. AWP is often used to calculate the cost of medications. Evaluating mismatches between the provided and actual AWP helps brokers identify cost savings on prescription drugs where the contract AWP is higher than the actual AWP.
- Drug Rebates: Many pharmacy contracts prioritize rebated drugs even if that rebate is not directly passed on to the plan or participant. By reviewing expected rebates and rebates received, at the claim level, brokers can more easily identify how rebates impact plan spend.
- Rebate and Drug Exclusions: Drug exclusion lists are typically built on marketing rather than clinical evidence. Highly rebated drugs are more likely to be included than low-rebate brands, generics, or therapeutic alternatives. Identifying and evaluating drug exclusions allow brokers to pinpoint how exclusions are affecting overall spend. Likewise, rebate exclusions are used to exclude specific drug types from the rebate program. By examining rebate exclusions, brokers can see if rebate exclusions are being used to finance higher guarantees.
- Dispensing Fees: Comparison of actual versus contract dispensing fees – at the claim level – allows brokers to identify if contract rates are being met.
By evaluating these KPIs, brokers can determine if the contract meets their clients’ needs. By analyzing plan data and identifying areas of improvement, brokers can work with the client and pharmacy benefit manager to optimize pharmacy plan performance and achieve cost savings.
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Prescription Care Management is a healthtech company dedicated to simplifying pharmacy and medical plan management for brokers and plan sponsors. With plan-specific analytics and insights, PCM’s Performance tool validates contract spend, guarantees, and rebates with a few clicks. To learn more about partnering with PCM, click here.