Pharma/PBM Contracts Are Increasingly Complex, Opaque

  • Apr 14, 2022

    Gaining market access for therapies is key to pharma manufacturers’ success. And it’s not merely access but where on a formulary that access occurs — as well as the formulary tier of competitor products — that’s crucial. To help secure placement, drugmakers enter into contracts with PBMs — and, increasingly, their group purchasing organizations (GPOs) — entities that in turn enter into pharma contracts on behalf of their health plan and employer clients. But these contracts have grown increasingly complex and opaque, and companies should ensure they understand exactly what they’re signing, say industry experts.

    These contracts are proprietary, almost always have nondisclosure clauses and vary by manufacturer, PBM and GPO, so many details around them remain unknown. However, sources tell AIS Health that certain standard items should be included. Those include “definitions, financial terms, requirements to qualify for payments, payment timelines, data sharing, confidentiality,” among other aspects, says Katie Asch, Pharm.D., senior director and U.S. consulting pharmacy practice lead at Willis Towers Watson. In addition, states Jenisha Malhotra, senior manager in Risk & Financial Advisory at Deloitte Life Sciences & Health Care, other items that may be addressed are details around the effective dates of the contract; pricing or incentives, including rebates or discounts; eligible products; responsibilities of the contract signees; and eligibility requirements, including eligible facilities.

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  • Angela Maas

    Angela has an extensive background of editing, reporting and writing for trade and consumer publications. She has written Radar on Specialty Pharmacy (formerly called Specialty Pharmacy News) since she joined AIS Health in 2005 and has broad knowledge of the various issues at play within the space. Before joining AIS Health, she was managing editor at Employee Benefit News and Employee Benefit News Canada and managing editor at HemAware (a hemophilia publication), Lupus Living and Momentum (a multiple sclerosis publication). She has a B.A. in English and an M.A. in British literature from Arizona State University.

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