STAT Article Highlights the Importance of Independence in Pharmacy Consulting
Posted on June 23, 2023
If you’re reading anything by PSG, you likely are already aware that the pharmaceutical supply chain is complex and, at times, dysfunctional. Many are aware of the conflicts of interest that exist among PBMs, pharmacies, and pharmaceutical manufacturers. This week, STAT published an article after a yearlong investigation into the sometimes opaque financial relationship between consulting firms and PBMs. This is an area of complexity that we don’t often hear much about. However, the investigation found evidence of pharmacy consulting firms receiving direct and indirect compensation from PBMs, sometimes referred to as “market-derived income,” based on the consulting firm’s volume of clients or prescriptions with that PBM. While we cannot comment on other firms’ practices, I wanted to take this opportunity to reiterate PSG’s business practices.
PSG unequivocally only receives compensation for the services performed for our clients. We do not receive any revenue based upon PBM market share, and we do not receive any portion of rebates or manufacturer-derived revenue. That has always been PSG’s approach and continues to be the case. The Consolidated Appropriations Act (CAA) passed at the end of 2020 did force more transparency in our industry as employers were now required to know and ensure the reasonability of vendor compensation. In response, we believe some consultants did change their business practices and increased disclosures. However, for PSG, this regulation had little impact beyond administrative work. The reason is that integrity and a lack of conflict of interest are more than good business practices for our firm. This is in our DNA, it’s one of our five core values, and it’s how our firm has and will always choose to do business.
PSG made a strategic decision early on to be fiercely independent and maintains that approach today. We could have grown faster and become larger had we participated in these arrangements but were unwilling to sacrifice our independence. Our clients rely upon us to ensure their best interests are represented in PBM contracts. They rely on us to audit the PBM contractual performance and identify non-compliance. Furthermore, clients rely upon our clinical expertise to analyze appropriate strategies for drug coverage and reduce waste. The only way to advocate for our clients is when we have no conflicts of interest, especially regarding which PBMs the clients choose to partner with or what volume of drugs are dispensed. We are passionate about providing unbiased insights and advice to our clients, and that will never change.
