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Breaking Down Drug Costs

02/04/09

  05:24:43 pm, by MedBen5   , 227 words,  
Categories: Prescription, Discounts, Health Plan Management

Breaking Down Drug Costs

Filling a Prescription

Just how do pharmaceutical companies price their products? As this article in the Employee Benefit News reveals, it doesn’t happen in a vacuum, and it involves quite a bit of number-crunching.

Multiple considerations go into the drug pricing process, from the manufacturer’s research and development costs to market demand and competition. Manufacturers also negotiate with pharmacy benefit managers (PBMs), who administer prescription plans and create networks with contracted pharmacies. In turn, the PBMs negotiate prescription prices with the pharmacies. On top of all that, generic drugs and mail order services factor into the total pricing equation.

Manufacturer discounts, rebates and other pricing concessions are common to larger PBMs. To quote from the article: “Successful PBMs are effective in leveraging their aggregated volumes and patient programs to achieve even deeper discounts.”

MedBen provides cost-effective retail prescription coverage to its clients through Pharmacy Data Management (PDM), a leader in pharmacy benefits management. The MedBen Prescription Plan passes 100% of paid formulary rebates onto the Health Plan through the PDM network. In addition, significant savings are generated by a cost pass-through approach to generic drugs.

Together, MedBen and PDM offer a level of transparency that equates to more plan savings for the employer. We have consistently beaten the odds by keeping annual Rx cost increases below the national average.

To learn more about MedBen pharmacy services, please visit the MedBen website.

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