Title
Consider approving Resolution No. 2026-116 authorizing a Plan Sponsor Agreement with ServeYou Rx for Pharmacy Benefit Manager (PBM) services for three (3) years; and take appropriate action.
Body
REQUESTOR:
Human Resources Department
BACKGROUND:
The City of Farmers Branch recognizes that providing a competitive and comprehensive health insurance program is essential to attracting, retaining, and supporting a highly qualified workforce. Employee health benefits are a critical component of the City's total compensation strategy, promoting the well-being, productivity, and financial security of employees and their families. By offering access to quality healthcare coverage, the City demonstrates its commitment to employee wellness while ensuring its ability to recruit and retain the talented professionals necessary to deliver high-quality municipal services to the community.
The City of Farmers Branch provides health insurance benefits to eligible full-time employees through a self-funded health plan. In a self-funded plan, the City pays medical and pharmacy claims as they are incurred rather than purchasing a fully insured health plan from an insurance carrier at a fixed cost. This allows the City greater flexibility and control over cost strategies and plan design. To protect the City against catastrophic claims, stop-loss insurance is purchased to reimburse the City for claims that exceed specified thresholds.
Generally, every three years, the City works with its long-time insurance broker, McGriff Services (now a Marsh/McClellan company), to issue a Request for Proposal (RFP) to evaluate market offerings from a variety of carriers and to remain competitive in the employer space.
The RFP process was designed to evaluate vendors based on overall cost, program options, employee disruption, pharmacy management strategies, and long-term value to the City and its employees. The City received proposals from five medical plan administrators and six pharmacy benefit management vendors. Following the evaluation of the proposals, staff is proposing to transition pharmacy services to ServeYou Rx.
DISCUSSION:
Approval of Resolution No. 2026-116 would authorize a plan sponsor agreement with ServeYou Rx for administrative services related to the City’s self-funded employee pharmacy plan.
Pharmacy services presented the greatest opportunity for cost savings and plan design improvements through the RFP process. ServeYou Rx provided the strongest overall proposal, offering the most competitive pricing, detailed cost-saving projections, and a comprehensive suite of member-focused programs. The proposed pharmacy program is expected to generate significant savings for the City through a combination of reduced administrative costs, manufacturer rebates, biosimilar drug requirements, specialty pharmacy management, and an optional international prescription program.
This transition will cause minor disruption to employees' pharmacy services during the initial phase for those with existing and recurring medications.
FISCAL IMPACT:
Budgeted Financial Impact: Pharmacy expenses will share a portion of the planned and prepared budget increase of $600,000 with the City’s self-funded health plan for medical, pharmacy, and stop-loss services.
POSSIBLE COUNCIL ACTION:
1. I move to approve Resolution 2026-116 as presented.
2. I move to approve Resolution 2026-116, with modifications.
3. I move to table the issue for further study or take no action.
ATTACHMENT(S):
1. Resolution 2026-116
2. Exhibit A - Plan Sponsor Agreement - ServeYou Rx
3. Presentation