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Item 1.C.
 
City Council Regular
Date: 12/12/2022
Title: SmithRx Pharmacy Benefit Manager Contract
Presented by: Karla Stanton, Human Resources Director
Department: Human Resources
Presentation: No
Legal Review Yes

RECOMMENDATION

Staff recommends approval of SmithRx Pharmacy Benefit Manager services agreement for City employees' pharmaceutical needs.

BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)

Pharmacy Benefit Managers (PBMs) are companies that manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers, and other payers. By negotiating with drug manufacturers and pharmacies to control drug spending, PBMs have a significant behind-the-scenes impact in determining total drug costs for insurers, shaping patients’ access to medications, and determining how much pharmacies are paid.

PBMs operate in the middle of prescription drug distribution chains by providing the following:
  • Develop and maintain lists, or formularies, of covered medications on behalf of health insurers, which influence which drugs individuals use and determine out-of-pocket costs
  • Use their purchasing power to negotiate rebates and discounts from drug manufacturers
  • Contract directly with individual pharmacies to reimburse for drugs dispensed to beneficiaries.
The City facilitated a Request For Proposals for PBM services to:
  • Effectively address rising specialty medication costs while positively impacting patients
  • Achieve full transparency and alignment of City’s interests
  • Understand and optimize effective clinical programs
  • Balance cost-control with patient intervention/disruption
  • Provide forward-thinking and market-leading programs in a rapidly changing industry
The RFP delivered multiple competitive bids but SmithRx was chosen as the best PBM solution moving forward.  SmithRx offered the most favorable contract terms, projected 15% net-cost reduction while not disrupting patient prescription therapy.  SmithRx is a middle-market PBM serving self-insured companies across the country with a transparent fee structure and effective specialty-management solutions.  SmithRx also held an existing integrated relationship with miRx pharmacy which is where the majority of City of Billings' Health Insurance Plan participants fill their medications.

 

ALTERNATIVES

City Council may:
  • Approve; or,
  • Not Approve

FISCAL EFFECTS

.  SmithRx offered the most favorable contract terms, projected 15% net-cost reduction while not disrupting patient prescription therapy. The fee for PBM services will continue to be paid from the City's Health Insurance Fund.

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