Key Negotiation Terms
| Term | Employer-Favorable Provision |
|---|---|
| Net cost guarantee | Guaranteed net cost per prescription by drug category |
| Rebate pass-through | 100% of rebates passed to employer; no retention |
| Audit rights | Full audit rights including pharmacy invoices and manufacturer contracts |
| Data ownership | Employer owns all claims data; full portability |
| Performance guarantees | Claims accuracy, turnaround time, member satisfaction |
| At-risk fees | 10–20% of fees at risk based on performance |
| Termination | 90-day termination notice; no penalty for termination for cause |
Competitive Leverage
Competitive pressure from multiple finalists is the most powerful negotiation leverage. When the selected PBM knows they are competing against other finalists, they are more willing to improve their terms. Maintain competitive pressure throughout the negotiation — do not reveal your preferred PBM until the contract is signed.
Legal Review
Compliance Note
PBM contracts are long and complex — engage ERISA counsel and a pharmacy consultant to review the contract before signing. Key review areas: (1) net cost guarantees and how they are calculated; (2) rebate pass-through provisions; (3) audit rights; (4) data ownership; and (5) termination provisions. Contract terms that seem minor can have significant financial consequences.