Thirty Companies Join Rx Collaborative

February 4, 2005 ( - Thirty large employers have grouped together to form Rx Collaborative, a drug purchasing coalition that will likely net the companies involved cheaper prescription drug benefits.

The collaborative, which is operated by Towers Perrin, has a contract with pharmacy benefits manager (PBM) Medco Health Solutions and was first announced last February. As of Thursday, 30 large employers had joined the group before choosing Medco. Seventeen other PBMs were evaluated, according to a press release from Towers Perrin. The group is designed to ensure that the pharmacy company passes on all manufacturers; rebates, discounts, and dispensing fees, as well as ensure pricing transparency.

Companies in the program also have the ability to audit the PBM, according to the news release. They also have access to cost data for the purpose of better long-term cost management.

The failure to pass along savings to companies purchasing drugs from PBMs has caused some controversy as of late, with Medco paying $29.3 million to settle claims brought by multiple state attorney generals last April.

“The PBM industry is at a crossroads. Prescription drug costs have grown significantly over the past five years. Moreover, actual manufacturing costs, discounts and other aspects of drug pricing have been largely invisible to employers, making it extremely difficult for employers to effectively manage their drug benefit programs,” said David Guilmette, Managing Director and leader of the global Health & Welfare practice of Towers Perrin’s HR Services business, in the announcement.

In the program, employers pay Medco a flat rate based on the number of participants in a health plan, which ensures that there are no incentives for the PBM to promote more expensive drugs or push for higher utilization. Savings can be up to 10%, according to Towers Perrin.