National CooperativeRx is approaching its 20th year of delivering substantial pharmacy benefit savings to employers who self-fund employee benefits. Our milestone anniversary prompts us to revisit our origin and the vision that sparked our formation. In an ever-evolving pharmacy benefit management industry, a growing need for transparency and oversight became apparent, and thus, National CooperativeRx emerged as a unique and effective solution.
The History of the Pharmacy Benefit Management Industry
Insurance companies began offering prescription drugs as a health plan benefit in the 1960s. Pharmacy benefit managers (PBMs) were established to assist insurers in controlling drug expenditures. PBMs were originally only in charge of deciding which drugs were offered on formularies and drug claim administration.
Throughout the decades, the role of PBMs transformed. PBMs began managing prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, employers, and other payers. Through negotiations with drug manufacturers and pharmacies, they started playing a significant role in determining total drug costs for insurers, shaping patients’ access to medications, and determining how much pharmacies are paid. As PBMs grew and became more complex, concerns arose regarding price transparency and ulterior motives surfaced.¹
The Formation of National CooperativeRx
In 2003, a group of forward-looking self-funded plan sponsors and health care coalitions faced a common challenge: they struggled to find PBM options with understandable pricing. As smaller groups, it was difficult to obtain the same discounts PBMs offered larger health plans. Additionally, PBMs were not providing all the data necessary for plan sponsors to make important plan decisions and were not controlling pharmacy spend at the level groups desired. Recognizing the need for greater transparency in pricing and overall PBM oversight, the group came together to establish National CooperativeRx.
The mission of National CooperativeRx was clear from the start: to assure high-quality, cost-effective prescription drugs and services to a diverse group of employers and health plans. The self-funded plan sponsors and health care coalitions united to negotiate one pharmacy benefit contract with a PBM. Leveraging their collective size, they achieved more favorable discounts, rebates, and contract terms than they could have negotiated separately.
National CooperativeRx’s founders held a broader vision beyond negotiating a PBM contract. Throughout the years, they assembled a team of knowledgeable staff that has continued to provide comprehensive oversight from both clinical and account management perspectives. On-site pharmacists and account managers provide supplementary review to ensure better control over pharmacy spend, confirm contracted discounts and rebate guarantees are met, and optimize plan designs for maximum value.
National CooperativeRx adopted a not-for-profit, member-owned, and member-governed cooperative model to ensure the Cooperative was, and continues to be, aligned with its members’ interests. Plan sponsors who join the Cooperative become owners and receive ownership dividends. This cooperative model also provides the benefits of transparency, granting members access to information on all their pharmacy transactions and claims data.
The formation of National CooperativeRx provided a long-lasting solution to the issue of costly pharmacy benefits when contracting directly with a PBM, while also enhancing clinical management.
National CooperativeRx Today
In 2024, National CooperativeRx will undergo substantial growth, with a membership consisting of 320 groups, serving nearly half a million lives across all 50 states. Over the past two decades, our values, mission, and cooperative model have remained. We have consistently negotiated valuable pharmacy benefit contracts on our members’ behalf, while also enhancing our oversight with the assistance of a growing team of industry experts and the development of innovative clinical programs.
Entering our 20th year, we will continue to adapt and evolve around the shifting pharmacy benefit landscape, with members’ best interests remaining our top priority. We are prideful in being your trusted choice for pharmacy benefits and strive to meet and exceed your needs as members and partners.
Mark your calendars for our 20th anniversary celebration at our Annual Meeting on May 7, 2024.