Guarantee Exclusions
Guarantees in a PBM contract refer to specific commitments made by the PBM to the employer. These guarantees ensure a certain level of financial performance or benefits to the employer. PBMs can contractually exclude certain categories of drugs within a category from being included in the guarantee. Specialty Guarantees Given that specialty drugs are the single biggest cost driver of pharmacy benefit plans, employers should confirm if the guarantees in their existing contract are client specific or based on the PBM’s book of business. Ideally, employers should ensure separate specialty drug financial guarantees are well defined and written into their contracts. Performance Guarantees Employers typically establish predetermined levels of service with the PBM, known as performance guarantees. If those performance guarantees are not met, the PBM pays back the employer. To optimize their pharmacy contracts, employers should negotiate performance guarantees on agreed upon amounts or financial targets (at-risk dollars to the PBM) for what PBMs will compensate back to them if the terms are not met. Rebate Guarantees When PBMs receive rebates from pharma manufacturers, employers may be able to claim a portion of those payments to help reduce overall plan costs. Rebate minimum guarantees in PBM contracts are assurances provided by PBMs to employers ensuring a guaranteed amount of payment they will receive, irrespective of what the PBM receives from the manufacturer. Rebate switching Refers to a provision that allows the PBM to offset or deduct any over performance in one guarantee category against any amounts the PBM owes to the employer as a shortfall in another guarantee category. Every category of financial guarantee such as rebates, discounts, generic dispensing rates, specialty drug price caps, or clinical outcomes.
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