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When introducing National CooperativeRx to brokers or plan sponsors, we often hear:
“Oh, so you’re like a coalition, collective, or collaborative?”
While these purchasing models share a common goal—aggregating the buying power of individual plan sponsors to lower pharmacy benefit costs—their structural differences in governance, pricing, and accountability significantly impact their effectiveness for plan sponsors. This article outlines the different models of purchasing organizations, potential challenges, and how National CooperativeRx’s cooperative model helps overcome these challenges.
Challenge: Accountability in Ownership
Ownership of purchasing models vary. From not-for-profits to venture capital and everything in between, different purchasing models create different ownership challenges. Plan sponsors should ensure the model they are evaluating has mechanisms in place to hold ownership accountable.
The Cooperative Solution: Member-Owned and Governed
National CooperativeRx operates as a true cooperative where each member has equal ownership and voting rights. The one-member-one-vote system ensures that decisions are democratic and transparent, and that all members’ interests are represented.
What This Means: Members drive decisions, ensuring that governance remains aligned with their long-term goals.
Key Questions to Ask About Governance:
1. Who makes decisions for the coalition/collective/collaborative?
→ Decisions made with input from plan sponsors lead to more aligned outcomes, whereas those made by external investors may result in different priorities.
2. Do plan sponsors have voting rights?
→ Without voting rights, plan sponsors may have limited input on key decisions that affect their costs and outcomes.
3. How are conflicts of interest managed?
→ Understand how potential conflicts are addressed to ensure that all decisions are made in the best interest of patients and plan sponsors, without any undue influence or bias.
Challenge: Financial Motivations and Transparency
Many purchasing models are for-profit or have external investors, which could lead to prioritizing profit generation over cost savings for plan sponsors. They often retain portions of rebates, audit recoveries, or impose additional fees, making it difficult for plan sponsors to see their true savings.
The Cooperative Solution: Not-for-Profit Model
National CooperativeRx operates as a not-for-profit organization with no external investors. 100% of rebates (broadly defined), audit recoveries, retired equity, and excess revenue in the form of patronage dividends are all returned to members.
What This Means: The Cooperative is fully aligned with members’ interests and focused on reducing costs rather than maximizing profits.
Key Questions to Ask About Financial Motivations and Transparency:
1. How are excess revenues used?
→ Ask if all excess revenues are returned to plan sponsors or if they are retained by the purchasing organization.
2. Are all rebates passed through?
→ Understand how rebates are defined and if/how they are returned to plan sponsors.
3. Does the organization charge hidden fees?
→ Ask for full disclosure of all fees and administrative charges.
4. Can the organization provide detailed financial reports?
→ Ensure the organization provides regular financial reports to track plan spend and promised savings.
Challenge: Contract and Pricing Disparities
Plan sponsors must carefully examine how purchasing models structure their PBM contracts. In some cases, these organizations act as intermediaries, using separate agreements that limit transparency and prevent plan sponsors from accessing real pricing terms. These organizations may also prioritize new or larger groups with better deals, creating inequities for smaller and long-standing groups.
The Cooperative Solution: One Master Contract for All Members
National CooperativeRx ensures that all members, regardless of size, receive the same discounted pricing, rebate terms, and contractual protections. Our member groups sign onto this master contract and see the full financial arrangement with our PBM partner.
What This Means: All members, big or small, benefit equally from the Cooperative’s purchasing power and are treated fairly in all aspects of the partnership.
Key Questions to Ask About Contracts and Pricing:
1. Is there a secondary contract between the PBM and purchasing organization?
→ Understand the relationship between the PBM and purchasing organization and how a secondary agreement may affect pricing and terms for plan sponsors.
2. Are there different contracts or pricing based on group size?
→ Understand how group size may impact pricing, contract terms, and services.
3. Will existing groups be offered the same terms and pricing as new groups?
→ Ensure there are no disparities that could create dissatisfaction or a sense of inequity.
Challenge: Limited Resources
Some purchasing models lack dedicated staff or administrative support, resulting in inconsistent service levels, limited clinical oversight, and reactive rather than proactive management.
The Cooperative Solution: Dedicated Professional Staff
National CooperativeRx employs a team of in-house experts, including account managers, clinical pharmacists, and strategic advisors, who provide proactive support and customized plan management. The team of clinical pharmacists develop and manage in-house clinical programs that are provided at no additional cost to members.
What This Means: Members benefit from personalized service and cutting-edge clinical innovations.
Key Questions to Ask About Resources and Support:
1. Does the organization have dedicated staff?
→ Ensure the organization has full-time staff responsible for managing and supporting plans in the best interest of patients and plan sponsors.
2. What clinical programs are available?
→ Ask if the organization offers clinical oversight and specialty drug management to help control costs and understand any associated costs for these programs.
3. How proactive is the organization in managing pharmacy plans?
→ Seek organizations that take a forward-thinking approach, offering consistent, preventative support rather than waiting for issues to arise.
Challenge: Short-Term Focus
Some coalitions, collaboratives or collectives form for specific projects or short-term goals, then disband once those projects are completed. This can lead to inconsistent support and instability for plan sponsors.
The Cooperative Solution: Long-Term Stability
National CooperativeRx has been in operation for over 20 years, demonstrating a proven track record of managing drug spend and delivering sustained success for its members.
What This Means: Members can rely on the Cooperative as a long-term solution.
Key Questions to Ask About Longevity:
1. How long has the organization been in operation?
→ Look for a long-established organization with a proven track record.
2. What is the organization’s long-term strategy?
→ Ensure the organization has a sustainable approach to adapting to the changing landscape of the industry.
3. How does the organization stay ahead of industry trends?
→ Inquire about the organization’s innovations and how they stay ahead of emerging trends and regulatory changes.
Ready to Maximize Your Pharmacy Benefits?
If you are a self-funded health plan looking for a reliable, transparent pharmacy benefit partner, consider National CooperativeRx. Our cooperative structure, competitive pricing, dedicated support team, and in-house clinical oversight set us apart from others in the industry.
Contact us today to learn more about how National CooperativeRx can help maximize your pharmacy benefit savings and improve member health outcomes.
