Plan sponsor controls the formulary

Claim Administrator utilizes its own Drug List and Prime supports Claim Administrator in the development, maintenance and updating of such Drug List.

Recorded reference: Page 43

Published rationale. Exhibit 7 Section 3 on page 43 says the Claim Administrator uses its own Drug List, that Prime supports its development, maintenance and updating, and that Prime performs exception reviews and supports the Claim Administrator's Pharmacy and Therapeutics and Business Committees. The Employer's only stated role is selecting a designated Drug List, and it agrees the Claim Administrator may promote dispensing consistent with that list. Exhibit 1 on page 18 has the Employer accept the Claim Administrator's standard utilization management criteria. There is no approval right over formulary changes, no lowest net cost analysis and no quarterly utilization management outcomes by drug. Because the same party controls the formulary and, under pages 28 and 43, keeps all rebates that page 43 says are based on formulary status and market share, the structure permits the harm the model term guards against. I weighed partial for the selection right but settled on bad.

Claim Administrator utilizes its own Drug List and Prime supports Claim Administrator in the development, maintenance and updating of such Drug List.

Recorded reference: Page 43

Published rationale. On Page 43, Section 3 states that the Claim Administrator utilizes its own Drug List, supported by Prime, while the Employer selects a designated Drug List from available options. However, the agreement does not require the sponsor to approve all formulary modifications, nor does it obligate the PBM to provide lowest net cost analyses or quarterly drug level utilization management outcome reports. While the sponsor has initial plan design selection, ongoing formulary control remains with the administrator and Prime.

Employer acknowledges and agrees that Claim Administrator may, in a manner consistent with the Benefit Plan, promote the dispensing of pharmaceuticals in a manner consistent with the designated Drug List selected by Employer.

Recorded reference: Page 43

Published rationale. Page 43 gives the employer a selection of a designated drug list and binds promotion to the benefit plan, which is some sponsor control. The same page says the administrator uses its own list, Prime supports its development and maintenance, and Prime conducts exceptions under its contract with the administrator. The draft does not require city approval of every formulary change, presentation of lowest net cost alternatives, or quarterly drug-level utilization management outcomes. Page 48 defines the drug list primarily as coverage and tier information. This is materially weaker than the model's approval and analytic oversight requirements. The city controls benefit design generally on page 4, but that does not translate into the specific formulary-change veto.

Employer acknowledges and agrees that Claim Administrator may, in a manner consistent with the Benefit Plan, promote the dispensing of pharmaceuticals in a manner consistent with the designated Drug List selected by Employer.

Recorded reference: Page 43

Published rationale. Page 43 says Claim Administrator uses its own drug list, with Prime supporting development, maintenance, and updates, and Prime performing exception reviews under the Prime agreement. The Employer agrees that Claim Administrator may promote dispensing consistent with the designated drug list selected by the Employer, in a manner consistent with the benefit plan. Selection of a designated list is some sponsor role. It is not approval of the list or of every change. There is no duty to give the Employer a lowest net cost analysis, and no duty to report utilization management outcomes by drug each quarter. Exhibit 1 on Pages 18 and 19 offers standard claim reports in Claim Administrator's format, not those analyses. Additional reports may carry a supplemental charge and must be agreed in writing. The model contract requires sponsor approval of the formulary and every change, a lowest net cost analysis, and quarterly utilization outcomes by drug. The selection sentence keeps this from being missing. Operational control of the list stays with Claim Administrator and Prime. That is partial.

promote the dispensing of pharmaceuticals in a manner consistent with the designated Drug List selected by Employer

Recorded reference: Page 43

Published rationale. The model term gives the plan sponsor approval of the formulary and every change, plus lowest net cost analysis and quarterly utilization management outcomes by drug. What the draft offers is a selection right, not control. Page 43 says the Claim Administrator uses its own Drug List, with Prime supporting development, maintenance and updating and performing exception reviews under its agreement with the Claim Administrator; the Employer merely selects a designated Drug List, presumably from options the vendor offers. Nothing requires the Employer to approve subsequent changes, nothing requires lowest net cost analysis, and no quarterly utilization management outcome reporting to the Employer appears. Definition 13 on page 48 describes the Drug List as an informational list about tier status. The Employer picks a menu from the vendor's kitchen. That is present but materially weaker than sponsor control of the formulary.