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Why Transparency is Essential to Help Lower Cost of Prescription Drugs

Explaining why prescription drugs cost so much is complicated. But here’s what we’re doing to advocate for more transparency in the pharmacy industry.


I’ve seen a lot of change in the time I’ve been in the pharmacy industry. In fact, not much changes faster than the price of pharmaceutical drugs. You can’t watch the news or read a newspaper without hearing something about drug prices. And I hear countless stories about how people in my community can’t afford their medication. 

Why transparency is critical

I recently went to my local pharmacy and picked up three prescriptions for generic medications. One was $0.90, the next was $20.00, and the third was $90.00. Even as a pharmacist, I left there baffled at the difference in costs. And, I’m honestly not sure if I could explain the discrepancy, even after being in the industry for a while.

Earlier this year, Congress held hearings to get to the root of the problem. They first met with pharmaceutical manufactures, and then, held a second hearing with national Pharmacy Benefits Managers (PBMs). Even after these discussions, they’re still left with this fact: Pharmaceutical pricing is complicated and not transparent. The CEO of Merck & Co., Ken Frazier, said it well in a recent Congressional hearing, “If patients knew what their options were, they wouldn’t make these choices.” 

On a recent trip to Washington, D.C., I was asked, “What’s the solution to high drug prices?” While I honestly don’t know the answer, here’s what I do know: Being more transparent and forthcoming about a complicated issue will never be a bad thing. Transparency, in its simplest terms, means operating in a way that allows others to see what actions are performed and why they’re performed. It also means being open, honest, and accountable for those actions.

Our efforts to be more transparent

At SelectHealth, we spent considerable time looking for a PBM that was willing to be open, honest, and accountable. We wanted to know what pharmacies were being paid for each prescription, and we wanted to pay the same price. We also understood that a PBM would want a price margin, and we were willing to pay a fair administrative fee for their services. But after an extensive search, we couldn’t find true transparency from any of the vendors in the market. Because of this, we became our own PBM in 1998—this was the start of SelectHealth Prescriptions®.

SelectHealth Prescriptions® operates differently than other PBMs. First, we are fully open and transparent. The price that SelectHealth pays pharmacies is the same price that our clients pay. We’re open about our clinical decision-making and how those decisions impact our finances, clients, and most importantly, our members.

At the outset, our core business was providing PBM services for clients of SelectHealth (individuals and companies). But we’ve recently expanded our services to include stand-alone clients—as we’ve recognized the need for increased transparency with the pricing and distribution of pharmaceuticals.

How we differ from other PBMs

As a steward of our own health plan, we operate as a fully transparent PBM partner with all of our lines of business—commercial, Medicare, Medicaid, stand-alone, and Individual markets. We have systems in place that protect our members and groups from rising prescription costs. For example, we don’t have hidden fees, and we don’t collect copays higher than the cost of drugs. We use nationally recognized standards, tools, and resources to categorize drugs, create definitions, and establish pricing.

The SelectHealth Prescriptions® philosophy has three areas of focus:

Transparent claims and pricing – Our contracted rates with participating pharmacies are the same rates our clients pay for prescription drugs. All expenses are disclosed, and we don’t use spread pricing to increase our revenue. We provide full access to reporting, and we don’t use proprietary formulas to define brand and generic definitions.

Clinically based programs – Our pharmacists, teamed with nationally recognized physicians and local experts, develop evidence-based formularies that maximize value and reduce costs. This helps us provide best clinical practice with the lowest appropriate cost.

Superior customer care – Our service experience is supported by processes and systems that focus on patients and members. Our online pharmacy tools provide members with the information they need to make informed decisions—they provide pricing information and offer lower-cost generic alternatives, where available.

To help increase transparency with drug costs, we’re working on offering additional tools to members that provide real-time information about pharmacy benefits, costs, and coverage. In the future, we hope to have a tool that better explains the costs of a treatment or drug.

As a not-for-profit health plan, we’re tasked with making coverage decisions that are in the best interest of the populations we serve. By offering our own PBM service—with transparency at the forefront of our intentions—our focus can remain on the health of our members, and that strength will always make us stand out from the rest.

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Post Author

Eric Cannon
Eric Cannon, PharmD, FAMCP, is Associate Vice President of Pharmacy Benefits for SelectHealth. Dr. Cannon has more than 25 years of experience in pharmacy, including pharmacy benefit management, retail, hospital, and home health.