Summary
A nationwide self-funded employer with 2,800 active and retired union members in the heavy construction industry faced escalating pharmacy benefit costs, a fragmented plan design, and opaque PBM practices. With $4 million in pharmacy benefit costs and members spread across the U.S., the fund needed a managed solution that could reduce spending without disrupting member care. Quest Analytics Group led a strategic RFP process complete with in-depth analysis, delivering major cost savings and long-term plan stability.
Problem
Referred by a national benefits broker who had partnered with Quest previously, the employer chose to bypass our complimentary benchmarking dashboard and proceed directly to a formal RFP. During our initial discovery and analysis, we uncovered several critical issues:
- Open formulary management with minimal utilization controls
- Incorrect drug categorization that distorted discount and rebate structures
- Unexplained specialty drug site-of-care that impacted cost and access
- Ineffective clinical oversight with no clear protocols for appropriate drug utilization
- Hidden administrative fees embedded in the medical plan structure
- Rebate disqualification terms buried in the PBM contract, limiting rebate eligibility for high-cost drugs
These issues drove inflated costs and created a lack of transparency. Members were negatively affected by sudden shifts in coverage, higher out-of-pocket costs, and medication denials—often without clinical justification or proper communication.
Solution
Quest launched a strategic RFP process, inviting competitive proposals from two large PBMs and three mid-market providers. We implemented a comprehensive cost-control strategy that included:
- Competitive RFP execution supported by the benefits broker
- Quarterly monitoring and annual audits to enforce contract compliance and ensure savings
- Specialty drug oversight to manage high-cost therapy areas
- Member outreach to support transitions to lower-cost, clinically appropriate alternatives
Despite receiving several strong offers, the employer opted to remain with its incumbent PBM under a restructured agreement with improved contract terms and a tightly managed formulary.
Success
Quest’s intervention delivered meaningful results for the plan sponsor:
- Delivered $1.3 million in first-year savings, exceeding the $1.2 million annual savings projection
- Reduced pharmacy costs by 32.5%
- Shifted all consultant and broker fees to the PBM, eliminating direct administrative costs
- Maintained member continuity with less than 1% experiencing disruption
This case demonstrates how targeted oversight, collaborative planning, and disciplined plan design can shift an employer from passive cost absorption to proactive cost control—achieving major savings without sacrificing member experience.