Healthcare: schemes tackle rise in prescription costs.

• Author: Marshall, Jeffrey
• Position: BusinessBRIEFS

To control prescription drug benefit costs, which are expected to rise 15 percent this year, pharmaceutical benefit management (PBM) providers have entered into complex financial arrangements with drug manufacturers and retail pharmacies, offering "transparent" or "pass-through" pricing terms.

Under these arrangements, a PBM provider agrees to charge a client the actual negotiated price of prescriptions paid to network pharmacies. However, according to the Segal Co., a New York-based benefits consultant, transparency is murkier than it initially appears for the following reasons:

* Transparent pricing arrangements do not include guarantees assuring employers that contractual financial terms will be delivered on a dollar-for-dollar basis. Most non-transparent agreements include financial guarantees applicable to drug pricing, as well as other pricing components such as manufacturer rebates. By accepting a transparent offer, an employer may sacrifice financial guarantees as a tradeoff for transparent pricing arrangements. The latter may change during a contract period as current pharmacy arrangements are renegotiated, and...