Optimizing PBM Partnerships: Employer Strategies from PSG’s 2024 PBM Customer Satisfaction Report

Understanding Employer PBM Partnerships Allows for Improved Pharmacy Benefit Strategy

After analyzing responses from nearly 250 healthcare payers, PSG recently published the 2024 Pharmacy Benefit Manager Customer Satisfaction Report, a free download. Respondents ranging from large health insurers to employers who sponsor a health plan and employee benefits provided insight into satisfaction levels with various PBMs and their services. We’ll explore three focus areas in this blog, supported by data from the 2024 PBM Customer Satisfaction Report:

1. Satisfaction with PBMs is declining among employers and health plans but continues to be higher among employers.
2. Employers desire a trusted partner to help them manage pharmacy benefit costs.
3. Health plans and employers are ready for change, but only some are ready to be catalysts for disruptive change.

The following is an overview of key findings from the perspectives of employers surveyed in the report. Additionally, we’ll review strategies employers can implement to optimize their PBM partnerships based on the research.

Declining PBM Satisfaction Among Payers

The last three years have seen a notable decline in PBM customer satisfaction and net promoter score (NPS) among health plans and employers. It’s challenging to identify precisely the causes of this declining satisfaction. However, the report indicates that payers are seeking, yet having difficulty finding, a transparent, proactive, and innovative partner to drive health and financial outcomes in the pharmacy benefit. The tumultuous market and media coverage of PBMs are likely contributors to decreasing satisfaction. It seems each week brings a new lawsuit, federal action or report, congressional testimony, state law, or a PBM startup with a unique or transparent pricing model.

Employers in Search of a Fiduciary Partner

In our various employer interactions, whether through survey responses or PSG client conversations, many organizations appear to be looking for more from a PBM partner. In this year’s survey, satisfaction declined in three key categories:

• Effective tools to manage drug benefit costs: The percentage of employers somewhat or very satisfied declined from 78% to 66%.
• Management of trend: The percentage of employers somewhat or very satisfied declined from 70% to 63%.
• Delivers products that are differentiated in the marketplace: The percentage of employers somewhat or very satisfied declined from 62% to 52%.

In client conversations, what we hear is similar. Employers are often disappointed when presented with new cost-saving opportunities they believed their PBM would have already considered, and temperatures rise when cost concessions are only provided upon issuing an RFP. Many employers are disenchanted by the products their current PBMs offer and are looking for a change to the unsustainable status quo.

PBM Transparency: A Common Concern

Satisfaction for PBMs of all sizes is decreasing. However, mid-market PBMs have been vocal in the marketplace about innovative models and transparency. Six PBMs have even formed a non-profit coalition to herald their transparency. These campaigns may be producing results. We found 82% of payers were at least moderately interested in including mid-market PBMs in their next procurement. Additionally, existing clients of non-Big 3 PBMs expressed a higher likelihood of renewing their contract without issuing a competitive RFP.

Much of the differentiation in smaller PBM models aims to address areas of dissatisfaction with large PBMs, with transparency a key focus. This differentiation was highlighted in the report, which found low scores for the Big 3 PBMs related to transparency in terms of rebates and sources of revenue. While these differences in satisfaction between Big 3 PBMs and other PBMs are meaningful, important distinctions also appear when viewing the findings by individual PBM. See a deeper analysis of specific PBM results and additional topics (awareness, familiarity, overall impression, and inclusion in recent RFPs) in the report supplement. 

A Call for Change and Innovation

Throughout our survey responses, as well as in board rooms, conference ballrooms, and legislative sessions across the country, many are calling for changes to PBM practices and behaviors. One of the most effective strategies to drive change in the industry is for payers to choose transparent and innovative PBM pricing models, contract terms, and clinical solutions, rather than settling for the familiar terms and spreadsheet exercises of the past. In fact, many potential solutions to the issues that vex PBM clients are already available: acquisition cost models, low-net-cost formularies, open networks, transparent rebate and pharmacy network designs, and more. This plentitude of innovative approaches and vendors led one of the largest health plans in the country, Blue Shield of California, to carve out individual aspects of PBM services to several vendors. This Modular PBA model combines competing PBM services, pharmacy partners like Amazon and Mark Cuban’s Cost Plus Drugs, rebate aggregators, and even direct pharmaceutical manufacturer negotiations to create a Modular PBA approach, which goes live for Blue Shield of California in 2025. Despite this appetite for change, other healthcare payers may hesitate to venture into new models and contracts. While 75% of respondents in our survey agreed that payers must adapt their own behaviors and relationships for the PBM industry to change, only half indicated their organization is currently willing to be part of disruptive change.

Proactive Strategies for Managing PBM Relationships

The best way forward for employers and health plans is vigilance:

• Regular procurements to find the best partners, models, and contract terms.
• Annual audits to ensure PBM partners abide by the contract terms payers fought hard for.
• Regular analysis of pharmacy plan data to enable timely action on growing trends.
• Frequent connections with an independent, trusted advisor to stay updated on market changes, opportunities, and strategies.

Amid growing pharmacy costs, increased public focus, legislative and regulatory scrutiny, breakthrough therapies, and innovative cost models, PSG can help your organization align your pharmacy plan. Let our independence, objectivity, experience, expertise, and technology assist you in making the optimal decisions for your pharmacy benefit and employees. Download the report and get started today.