What Pharmacy Benefit Discounts Really Mean For Your Bottom Line

Pharmacy benefit management remains one of the most confusing aspects of employee benefits programs. When evaluating Pharmacy Benefit Managers (PBMs), employers often fixate on discount percentages. However, these numbers rarely tell the complete story. Here's a practical breakdown of what these discounts actually mean for your business costs.

Understanding AWP Discounts

When PBMs showcase their discounts, they're typically referring to percentages off Average Wholesale Price (AWP). The biggest players in the market might offer impressive-sounding discounts around 17% off AWP, while smaller PBMs might offer around 15%.

That 2% difference seems meaningful, especially when dealing with large budgets. But let's examine what this means in practical terms:

For a $50 generic medication, for example:

• The large PBM - 17% discount: $41.50 final cost ($8.50 savings)

• The flexible PBM - 15% discount: $42.50 final cost ($7.50 savings)

• Actual difference: Just $1 per prescription

  
  

The High-Cost Medication Challenge

While that $1 difference on generic medications might seem worth chasing, consider this perspective: How many $50 generic prescriptions would you need to fill to equal the cost of just one specialty medication that costs $10,000 or more?

You would need 1,000 generic fills at that $1 savings to match just a 10% improvement on sourcing a single $10,000 specialty medication.

This isn't hypothetical math. Many employers now have employees using medications that cost $20,000 or more per fill. These high-cost medications are driving the significant increases in prescription costs we're seeing across the board.

Making Data-Driven Decisions

The key to making choices about PBMs isn't just looking at discount percentages—it's understanding your own usage data:

1. Analyze your current medication usage patterns

2. Identify your high-cost medication outliers

3. Calculate the real financial impact of different PBM approaches

4. Consider the service model and support for members

   
   

More Than a Discount Game

While generic medication discounts matter, they're just one piece of a much larger puzzle. For most employers, the management of high-cost specialty medications will have a far greater impact on overall pharmacy benefit costs.

When evaluating PBMs, look deeper than the headline discount numbers. Ask detailed questions about how they handle specialty medications, what resources they offer to help optimize costs, and how they'll work with you to manage the rapidly changing world of pharmaceutical care.

The right partner isn't necessarily the one offering the biggest discount—it's the one that can deliver the best overall value and support for your specific needs.

We design benefit programs that are easy to understand, easy to design, easy to use, and easy to enroll. We call it Sympl. Find out more on our website: https://www.symplbenefits.com/