Webinars & Videos

Are Your Prior Authorizations Actually Working?

August 3, 2022

Capital Rx

Your PBM probably tells you they’re saving you money with prior authorizations, but when is the last time you looked at your actual PA approval rates?  PBMs that profit from dispensing tend to “leave the gate open” when managing PAs.


Pharmacy benefit managers are under intense scrutiny right now. And for good reason, the profit of the typical PBM is tied directly to dispensing, meaning that these PBMs make more money when patients and plan sponsors spend more. Most plan sponsors are aware of the conflict of interest, but they don't fully understand how this conflict can directly impact their benefit plans.

Over the next few short videos, I'm going to arm you with three simple questions that you should ask your PBM today to help you understand whether their business model is costing you more money. And we'll start with prior authorization. PA is an important gatekeeper tool that's designed to prevent off-label or inappropriate use of medication, ensuring that the right patient gets access to the right drug. But if a PBM directly profits from the dispensing of expensive drugs, can they really be trusted to serve as a gatekeeper for access to those drugs?

So here's a question you should ask your PBM today. Can you show me a report of PA approval rates by drug for the past year? Now, the appropriate PA approval rates will vary by drug, but most managed care pharmacists are surprised to see PAs with approval rates hovering somewhere in the 60 to 75% range. But when clients request this report from their PBMs, many of them are surprised by PAs with approval rates in the high 90% range, sometimes a hundred percent of drugs being approved under a given prior authorization.

The PBM says they're acting as a gatekeeper, but the gates are being left wide open and what's more, the PBM gets to charge a fee for each of these PAs, even if all of them are approved. The cost impact of these "open gate PAs" can be substantial for plan sponsors. Requesting this report and evaluating the performance of your PAs is an important first step in understanding whether your PBM is working in your best interests, or simply looking to maximize their own dispensing profit.

Stay tuned for future videos with more important questions that you should be asking your PBM today.

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