When Lower Costs Aren't on the Formulary

Your formulary should help your members access the medications they need at the best possible price. But what happens when the structure itself works against that goal?

The Formulary Problem You Might Not See

Here's a scenario that plays out more often than most plan sponsors realize.

A brand medication loses its exclusivity. Generic alternatives enter the market at a fraction of the cost. Your members should benefit from these savings, right?

Not always.

In many cases, the expensive brand medication stays on tier 1 with a $5 or $15 copay, making it the attractive choice for your members. Meanwhile, the less expensive generic options get placed on tier 2, 3, or 4 with $45 or $65 copays.

Your member naturally chooses the option with the lower copay. The plan pays significantly more. Everyone assumes this is just how pharmacy benefits work.

Why Would This Happen?

The answer often comes down to financial arrangements you may not see in your contracts.

Pharmaceutical manufacturers want their brands on formularies. They offer substantial payments to PBMs to ensure preferred placement. These agreements can influence which medications appear on which tiers, sometimes in ways that increase costs rather than reduce them.

The result is a formulary that might prioritize revenue generation over cost containment.

The Product Combination Issue

There's another pattern worth understanding.

Take a medication like Duexis. This prescription costs around $2,500 per month. But Duexis is simply a combination of two over-the-counter medications that can be purchased together for roughly $18.

The combination gets a unique product code and appears on formularies as a covered medication. Your members fill the prescription. The plan pays the full amount.

These combinations add convenience for members, but the cost difference is substantial. When formularies include these products without considering alternatives, plan costs increase unnecessarily.

How DisclosedRx Operates

At DisclosedRx, we operate as The Fiduciary and The Fully Disclosed PBM®. We're contractually bound to act in your interests, not ours.

Our revenue comes from a single admin fee. We don't receive manufacturer payments that could influence formulary decisions. We don't benefit from keeping more expensive options on preferred tiers.

When generics become available, we help your members access them at lower costs. When combination products exist alongside less expensive alternatives, we ensure you understand the options. Full Disclosure means you see exactly how your formulary is built and why.

Your formulary should serve your plan and your members. It should prioritize clinical appropriateness and cost-effectiveness. It should be designed with your specific needs in mind.

Getting Formulary Design Right

Your members deserve access to effective medications at fair prices. Your plan deserves a formulary designed around your specific needs and clinical priorities.

DisclosedRx builds formularies that align with your goals. We provide complete visibility into how each decision affects your costs. We ensure that when lower-cost options become available, your members can access them.

Because pharmacy benefits should work for you, not against you.