Taking Contracts Apart: Defining PBM Costs

Pharmaceutical ContractDealing with Pharmacy Benefits Managers (PBM) can be one of the most technically confusing deals anyone can attempt to enter. A single contract typically cover issues regarding medicine, health care law, and even the economic state of the pharmaceutical industry. This is too much information for anyone to absorb and execute effectively.

Taking PBMs Apart

The inherently complex nature of these contracts are what makes it necessary for PBM consultants like CrystalClearRx.com to help people with their plans. The most common advice these companies give clients is to take contracts apart and examine it piece by piece. This allows them to understand the terms of the agreement at their own pace.

One of the most important things that a client should do when dissecting their PBM plan is to understand the agreement’s cost of particular drugs. Every PBM plan includes a definition of how much it plans to pay the PBM for every prescription filled. But, because of the thousands of prescription drugs on the market, it’s impractical to list prices for each individual drug.

Defining Costs

In order to streamline the listing process, most contracts use a discount from the published ingredient cost or the average wholesale price (AWP) as the definition of cost. The discount typically varies depending on the plan. For example, one PBM defines the cost of drug A to be the AWP minus fifteen percent, while another deducts eighteen percent.

A variation of this that clients might also see on their contracts is a general discount for several drugs. PBMs with this definition could say something like “Annual drug brand discount is equal to AWP minus fifteen percent guaranteed”. It’s actually quite simple, but only after the clients take the time to absorb just this part of the contract.

PBM contracts are the product of several fields of expertise coming together to give people the most complete and comprehensive plan possible. This, of course becomes the convoluted and confusing documents that reaches end clients. Do not get intimidated by the jargon and work through the contract one part at a time.

Defining Online Success with the Right Pricing Strategy

Online Shopping

Online Shopping

Let’s face it. Low prices are the manna from shopping heaven for many online shoppers.By far, such a price obsession seem to come to life most on Cyber Monday – the online shopping blitz of the year. Good thing manufacturers have pricing security measures installed; with this, sellers cannot just nosedive prices to hit rock-bottom levels.

The Online Shopping Trend

The Internet has revolutionized businesses worldwide. Because of its capacity to connect everyone, a business which would have been otherwise limited to selling in its small corner of the world can now have their goods available for people thousands of miles away.

U.S. Census Bureau data shows online shopping increased by as much as 27.4 percent from 2011 to 2012. In contrast, brick-and-mortar stores grew only by 0.1 percent – a measly number compared to what online stores are experiencing.

But, the Internet is a two-edged sword that many online retailers may have come to realize by now. All the information overload has produced more highly-informed consumers bent on  comparing prices at the tap of a finger.

Making the Most of Online Sales

The ability of online consumers to easily compare prices could certainly put businesses at a disadvantage in the advent of events like Cyber Monday – a day expected to rake in billions of dollars every year.

Nonetheless, enforcing MAP pricing policy allows prices to settle. MAP, or minimum advertised price, is a pricing level agreed by manufacturers that sets the limit on how low a product can go online. With this, resellers are free to do their pricing as long as it doesn’t go lower than the agreed MAP.

While this sets aside the needs of consumers, this only makes sense in the light of business. Only by setting the lowest possible selling price can brands maintain their strength and ensure that manufacturers can rake in profits.

With MAP, business thrives – free from the onslaught of uncalled-for rock-bottom prices.