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  • Sarah Devine

Save on prescription drugs through independent clinical review

Updated: May 17, 2023

Managing pharmaceutical spending is increasing in popularity as employers attempt to cut annual healthcare costs. A good place to start is by taking a look at each plan's formulary.

A formulary is the pre-approved list of drugs that is covered by a health plan. The formulary is usually created with the goal of getting as many rebates as possible from drug manufacturers. However, rebates may disguise themselves as savings when they do not account for lower cost alternatives. A lowest net-cost approach considers all the alternatives in the market and includes having an independent medical review which puts patients at the forefront of the decision-making process, ensuring the best treatment possible.

Independent clinical review plays a crucial role in developing evidence-based treatments that deliver better outcomes for patients with greater savings. For self-funded insurance plans with a lowest net-cost formulary, independent third-party review helps to ensure the efficacy of prescription drugs while also identifying lower cost alternatives that provide the same clinical outcomes.


Independent clinical review is conducted by a third-party organization that has no financial interest in the outcomes and only finds the best solution for the plan and member. They are usually paid a flat fee for their services, which can be paid for by the identified savings. By not being tied to manufacturer rebates, they ensure that medical treatments and procedures are only based on scientific evidence that gives the best outcome for the patient.


There are three main reasons why independent clinical review is crucial to deliver savings to the group. These include:

  1. Identifying Cost-Effective Medications - This looks at generic brands and even dosage options, as some medications provide similar results at lower dosages. It also considers similar lower cost alternative medications that provide the same clinical results.

  2. Supporting Evidence-Based Treatment Protocols – Novo Connection looks at all possible treatment options. This includes alternative medicines or combinations of medicines that would give patients the same or better outcomes.

  3. Avoiding Bias – Having an independent clinical review team drives decisions that are backed by data and managed by industry experts. Ultimately prioritizing patient’s medical care ensures decisions aren’t hindered by backdoor financial interest.

By including medications in the lowest net-cost formulary that are supported by independent clinical review, employers can give their employees access to high-quality medications that are both effective and affordable.


An alternative to a lowest net-cost strategy is choosing to chase rebates. In a rebate model, PBM’s are rewarded for promoting higher costing drugs, leading to greater rebates for the PBM’s (with a small fraction going to health plan owners). By choosing a rebate strategy, companies miss the potential to save six to seven figures on their annual prescription spending.

It can also disincentivize PBM’s from offering a larger formulary that includes lower-cost alternatives that have no attached rebates. By having a lowest net-cost approach, companies can avoid being swayed by short-term financial interest and instead prioritize long-term savings and patient outcomes.

Novo Connection is backed by years of industry expertise and believes that the best decisions are made when all the available information is considered. If you’re ready to save on your prescription drugs, reach out to one of our team members for a free quote on your existing formulary and see how a lowest net-cost approach can transform the way your company receives healthcare.

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