Employers Eye Alternatives to Traditional PBMs in 2022 Selling Season

by Jane Anderson

In a sign of pent-up demand as the COVID-19 pandemic winds down, a near-record number of companies likely will consider switching to a new PBM during the 2022 selling season that's now underway, consultants and observers say.

In addition, generally negative publicity about the PBM industry's contracts and tactics is leading employers to look at more transparent alternatives to the largest traditional PBMs, says David Dross, national practice leader for managed care pharmacy consulting at Mercer.

"We have seen a tremendous increase in plan sponsors saying they want to look at the big three, but they also want to look at other non-traditional options," says Dross. "We've also had some RFPs [requests for proposals] this year where at the beginning of the RFP, the plan sponsor says they don't want to go to any of the big three — they only want to go to nontraditional providers." Cigna Corp.'s Express Scripts, UnitedHealth Group's OptumRx and CVS Health Corp.'s Caremark comprise the trio of dominant PBMs.

These requests by plan sponsors have nothing to do with the pandemic, Dross says. "It's a philosophical position on the part of the plan sponsors that they just don't want to work with one of the big three, because they’re basically opposed to their business model."

For 2022, the plan sponsors who definitely don't want to contract with one of the big three PBMs are emphasizing transparency, member experience and customization, Dross says.

Overall, this doesn't involve enough business right now for the biggest PBM players to "really get worried," Dross says, but it could pose a threat to them in the future.

"The big three players still do have incredible size and scale compared to the rest of the market — it's roughly 75% or 80% market share," Dross says. "But the market dynamic around moving to transparency is real, and it’s definitely something that plan sponsors want." Dross says he's seeing "little baby steps around providing additional disclosure around underlying financial structure."

Peter Manoogian, principal at the consulting firm ZS Associates, says that specialty pharmacy costs are receiving considerable scrutiny from employer groups. "Employers are getting out of the year of hibernation" that occurred as a result of the pandemic, Manoogian says. "It's shaping up to be a very competitive season from all accounts. Employers are increasingly looking at PBMs' abilities to manage specialty drug costs proactively as a top decision criteria for selection."

From RADAR on Drug Benefits