The formulary decides what the plan pays long before a member reaches the pharmacy.
Which drugs are covered, on which tier and under what conditions is where most pharmacy cost is set. We help you decide when a narrower formulary or a separate pharmacy arrangement actually saves money, and what it will ask of your employees if it does.
Lowest list price, largest rebate and lowest net cost are three different drugs.
A formulary built around rebates can prefer the product that pays the pharmacy manager the most rather than the one that costs the plan the least.
Tiers
Tier placement sets the member’s share and steers which drug gets used. We check whether the preferred products are preferred for your net cost or for their rebate.
Exclusions
National exclusion lists remove drugs where a clinically equivalent alternative exists. They save money, and they generate member calls; the list should be read before it is adopted, not after.
Utilization Management
Prior authorization, step therapy and quantity limits apply clinical rules to high-cost drugs. Done well they cut waste; done loosely they become paperwork that saves nothing.
Every formulary saving has a list of employees attached to it.
We run the member impact before the savings estimate is accepted, so nobody learns about a change at the pharmacy counter.
Disruption Analysis
How many members take a drug that moves tiers or leaves the list, and what the alternative costs them. The savings figure means little without this number beside it.
Transition and Exceptions
Transition fills for current users and a working exceptions process for clinical need. Both belong in the contract, not in a promise from the account team.
Communication
Affected members hear what is changing, why, and what to ask their doctor, before the effective date. That single letter decides whether a change is remembered as a saving or as a grievance.
Bundled is simpler. Whether it is cheaper is a separate question.
Keeping pharmacy with the medical carrier and moving it to a separate pharmacy manager each have a real case. We model both on your claims rather than assume either.
Bundled with Medical
One carrier, one ID card, and medical and pharmacy data in the same place for care management. The pharmacy terms are the carrier’s, and in a fully insured plan they are not yours to negotiate.
Carved Out
Your own pharmacy contract, with pricing, rebate and audit terms you can negotiate and test. It adds a vendor, a data feed to coordinate, and usually requires the plan to be self funded or level funded.
What employers ask about formularies.
Can a small fully insured group change its formulary?
Usually only by choosing among the carrier’s plan options, some of which use a narrower drug list at a lower premium. We price those options at renewal.
Is a narrower formulary worse coverage?
Not necessarily. A well-built one covers a clinically equivalent drug for nearly every excluded one. The test is the disruption list and the exceptions process, not the length of the formulary.
How often should the formulary be reviewed?
At every renewal, and whenever a major drug loses patent protection or a new high-cost class arrives. Formularies change every year whether or not you are watching.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
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