Employer Healthcare Objectives
Employers expect pharma representatives to approach them with an "employer frame of mind." Most employers share similar objectives
when they offer healthcare benefits to employees. These include:
Providing competitive compensation and benefits packages in order to recruit high-quality talent
- Providing competitive compensation and benefits packages in order to retain high-quality talent
- Keeping the workforce healthy, which contributes to increased productivity of employees by minimizing absenteeism
- Maintaining coverage for large, retired workforces, which in some cases is as large, if not larger than, the active population
of worker families
- Ensuring that healthcare coverage costs do not negatively affect the businesses' ability to maintain market share and profitability.
Unlike hospitals, managed care organizations (MCOs) or insurance companies, employers rarely make all benefit-design decisions
without outside support and advice. They do not have the expertise to make all decisions in this arena. Instead, they tend
to consult with many diverse parties when making coverage decisions. Therefore, healthcare benefit and coverage decisions
are often a complex result of a fragmented healthcare process. Larger employers assume most, if not all, of the risk for benefits.
But at the same time, they delegate the granular decision-making to benefits managers, such as managed care organizations
and pharmacy benefit managers (PBMs). Consultants are frequently hired to weave the components into a holistic healthcare
tapestry. Coalitions do not serve individual employers but work with multiple employers on a regional level to support a variety
of initiatives, including wellness, purchasing, and lobbying.
At the Employer´s Office: Understanding
Activists and Passivists
Employers fall into two groups when it comes to designing and managing benefits: activists and passivists. Activists, typically
larger employers, take a more significant role in benefits design and decision-making. They are typically self-funded, have
performance criteria in their ASO (administrative services only) contracts, and meet frequently with benefits administrators.
Passivists, on the other hand, are typically smaller employers that generally accept the recommendations of various healthcare
advisors. Employer benefits consultants are increasingly pushing their clients to become more informed and active in their
Regardless of employer size, few take a proactive approach to pharmaceutical product decision-making. Instead, many employers
have taken a reactive approach. PBMs provide employers with annual and even semi-annual recommendations regarding formularies,
coverage, and benefits design. Employers tend to accept most of these recommendations but they sometimes exercise veto rights
on elements of these components.
Large employers analyze pharmacy and medical spend on a regular basis. They make changes in benefits after they see usage
become more extensive or costly. Cost becomes more of an issue when the employer sees alternative therapies, such as generics
or OTC drugs, as options. Some large employers have responded to overuse, for example, by adding an additional formulary tier
for lifestyle drugs, proton-pump inhibitors, and non-sedating antihistamines.
The Interaction of the PBM and the Employer
Large employers engage PBMs as ASOs. The employers receive the rebates and discounts directly but they are processed through
the PBM. However, employers struggle to quantify the true costs in terms of actual drug expenditures, particularly within
the setting of rebates and discounts, which are most familiar to pharma. Employers warn against focusing solely on cost and
not on outcomes. This highlights a need for more transparent contracts with PBMs, contracts that must include performance
The Employer View on Benefit Trends
As the ultimate payers of healthcare coverage, employers drive benefit trends. Discussions with employers should focus on
challenges from the employer's perspective. Pharma needs to present specific, actionable solutions to employer problems. If
an employer has a significant diabetes population, he wants to control the cost of diabetes in his medical plan. One way might
be to use a particular drug. However, not all employees will necessarily be candidates for that specific drug. So instead
of presenting an educational program on its own drug therapy, a company would do better to work with the employer to develop
a diabetes-specific initiative.