Which two factors are most important in determining if a plan sponsor overpays for its pharmacy benefit?

The correct choice highlights the significance of negotiating skills and the level of PBM industry knowledge in the context of a plan sponsor's pharmacy benefits.

Negotiating skills are crucial because they directly influence the ability to secure favorable rates and terms with pharmacy benefit managers (PBMs). Effective negotiation can lead to better pricing, discounts, and rebates on medications, thus preventing overpayment. On the other hand, a robust level of industry knowledge equips plan sponsors with an understanding of market trends, pricing structures, and the competitive landscape, which enables them to make informed decisions when engaging with PBMs.

Having both strong negotiating skills and a high level of industry insight allows plan sponsors to navigate the complexities of pharmacy benefits more effectively, ensuring that they do not incur unnecessary costs. This combination is essential to optimize the outcomes for the sponsors, ultimately influencing how much they pay for pharmacy benefits and whether they overpay.

In contrast, while other mentioned elements like the PBM's business model can impact pricing strategies and outcomes, they do not empower the plan sponsor in the same way that strong negotiation tactics and deep industry knowledge do. This is why the combination of negotiating skills and a thorough understanding of the PBM sector stands out as the most critical factors in determining potential overpayment