PBM 101: Definitions Matter

When a patient gets medication from their doctor or pharmacy, their medical provider can answer with certainty whether the medication is a brand drug or a generic drug. It is one of the first things any clinical pharmacist learns during pharmacy school.

PBM definitions

However, when it comes to answering the question of if a medication is a brand or generic in your PBM’s eyes, even our expertly trained clinical pharmacists would say “it depends.” Brand and generic definitions are a standard item included in a PBM contract but also one of the primary places for ambiguity and contract games.

If your brand and generic contract definitions are not written correctly, the consequences to your plan could become costly. The classification of a medication as a brand or generic drives the discounted rate and rebate guarantees.

Without the correct definitions, the same medication may be a generic on a member formulary, a brand when it comes to pricing guarantees, and back to a generic when it comes to rebate guarantees. Not only that, but a medication’s classification can change during the year even despite no other changes to the medication.

Why? The PBMs often include language that allows them to alter the medication’s classification, typically to their benefit. PBMs also may use proprietary lists that don’t give you transparency into how they have classified a medication.

How can employers respond?

Employers need an unbiased partner with expert knowledge of PBM contracts and definitions. At Innovative Rx Strategies, we ensure that every definition in your contract not only benefits you but is transparent. This allows for reconciliation and confirmation that you are getting what you expect from your PBM. Our process includes 60 contract definitions crafted from decades of experience to make contracts work for our clients. This is one of the reasons why our clients can see significant savings even without changing PBMs or causing member disruptions. Definitions matter.

Our team of experts at Innovative Rx Strategies is ready to help you leverage contract definitions to save. Contact us at the link below to have our team provide a no risk assessment contract review to ensure that your definitions matter.