Quick answer
Machine-readable Rx files are proposed federal requirements under the Transparency in Coverage Rule that would force PBMs to disclose prescription drug pricing. They matter because drugs make up at least 25% of employer healthcare spend—the fastest growing cost with the least visibility. Once enacted, they'll finally make true PBM benchmarking possible.
Key takeaways
- Prescription drugs make up at least 25% of total employer healthcare spend—the fastest growing cost with the least visibility
- Proposed Rx Drug MRFs under the Transparency in Coverage Rule would require PBM pricing disclosure
- Visibility into rebate structures reveals net drug prices—the missing ingredient for real PBM benchmarking
- Leverage shifts fast: when a plan sees its top drug's net rate is 28% above market, the conversation changes quickly
The significance of transparent drug pricing can not be overstated.
At the Self Insurance Institute of America’s Healthcare Pricing Transparency Forum, I recently told the audience how we can break out of the prescription drug pricing black box. We talked through proposed federal regulations, such as the Rx Drug MRFs, under the Transparency in Coverage Rule and Compensation Disclosures. These rules would require increased transparency from the pharmacy benefit managers (PBMs) that serve employer-sponsored health plans.
Searchable, machine readable prescription drug files are a big step in the quest to create shoppable health insurance and true healthcare pricing transparency. Because right now, employers are flying blind on a cost that makes up at least 25% of their total healthcare spend. And it’s the fastest growing cost that has the least visibility.
What will machine-readable Rx files change?
Once enacted, the regulations will allow us to understand all component parts of fees to the plan sponsor. This clears up the opacity in the Rx rebate structures, helping us figure out net drug prices. Without visibility to these pricing structures, true PBM benchmarking is virtually impossible. That's what brokers, benefits consultants and employers have been missing at the negotiating table.
Think about it: When a plan can see the net rate of their top drug is 28% above market, the conversation changes quickly.
Handl Health has been doing this with medical pricing for years. And while the industry has yet to achieve full transparency compliance, even imperfect pricing data changes the dynamic. It’s a huge step in the right direction because employers can use the data to ask real questions to drive down costs; consultants can provide true, impactful pricing benchmarks.
When prescription drug data becomes accessible at the same level, it removes a major blocker for the industry and finally gives plan sponsors the leverage they need to drive down costs.
By unifying healthcare pricing, utilization, benefit and quality data into a single analytical and operational layer, Handl Health empowers employers, brokers and payers to build flexible, cost-effective health benefits that perform. Our holistic infrastructure platform also empowers users to design, deploy and monitor alternative health plans.
Schedule a demo to see how we can help you put federally mandated price transparency data into action.
Frequently asked questions
What are machine-readable Rx files?
Proposed federal requirements—Rx Drug MRFs under the Transparency in Coverage Rule and Compensation Disclosures—that would require pharmacy benefit managers serving employer-sponsored plans to publish searchable prescription drug pricing data.
Why is prescription drug pricing called a black box?
Because Rx rebate structures are opaque, making net drug prices nearly impossible to determine. Employers are flying blind on a cost that makes up at least 25% of total healthcare spend.
How would Rx transparency help employers negotiate?
Visibility into all component parts of fees enables true PBM benchmarking. When a plan can see the net rate of its top drug is 28% above market, the negotiating conversation changes quickly.
How big a share of healthcare spend is pharmacy?
At least 25% of total employer healthcare spend—and it's the fastest growing cost category with the least visibility.
What can employers learn from medical price transparency?
Even imperfect pricing data changes the dynamic. Handl Health has shown with medical MRFs that employers can use the data to ask real cost questions and consultants can deliver impactful pricing benchmarks.
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