Managing Your Vendor

Managing Your Vendor

The working relationships between an employer, their advisors and vendors are critical for the development of effective strategies and the ongoing management of specialty drugs. This section provides valuable information and tools to support your vendor management efforts.

Employer Report on Pharmacy Benefits Middlemen

Middlemen continue to add to the cost of drugs, including specialty drugs. A report, Drawing a Line in the Sand: Employers Must Rethink Pharmacy Benefits Strategies, offers a call to action on the key issues and important steps public and private employers can take to improve the effectiveness, efficiency and value of pharmacy benefit programs to influence affordability and transparency.

Read the full report here.

Vendor Categories

The first step in effective vendor management is determining business needs and overall goals. Next, it is important for employers to coordinate their vendor contracting efforts in order to achieve set goals. Today, there are three broad categories of vendors that support employers in their benefit administration and management of specialty drugs.

Pharmacy Benefits Manager

Stand-alone, full-service PBMs are organizations that manage pharmacy benefits on behalf of a health plan/insurer or plan sponsor. They conduct activities that go beyond those of a claims processing only, third-party administrator and work to influence the behaviors of providers and patients that can affect the outcomes and costs of a drug benefit program. Drugs are either acquired through their own specialty pharmacy operations (drug distribution and clinical support), through an acquisition or they sub-contract with an independent specialty pharmacy.​​

Pharmacy Benefits Manager - Health Plans

They can offer just benefits administration like a TPA or PBM, or operate a full-service PBM as a free-standing internal department or subsidiary company. Full-service allows them to manage the pharmacist network responsible for drug distribution and provide clinical programs to support patient needs (similar to a stand-alone full-service PBM), but most sub-contract out these services. A few of the larger health plans have also built specialty pharmacies in house, while most others continue to sub-contract these out to an independent specialty pharmacy.

Independent Specialty Pharmacy

These licensed retail pharmacies focus on drug distribution and clinical service offerings for select conditions or diseases that require specialty drugs. They typically offer high-touch, full-service care for patients and employ many different health professionals. They also work with smaller patient populations that require complex, expensive therapies. PBMs and health plans often contract directly with independent specialty pharmacies, as well as employers, who can carve out specialty pharmacy services from their existing pharmacy benefit.