PBMs' 'Disruptive' Next Step

Pharmacy benefit management is expanding beyond the focus on higher co-payments and moving employees to generic prescription drugs. Several new-to-market vendors are bringing fresh perspectives and solutions to the business.

Thursday, April 4, 2013
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In 1997, I became involved with the formation of the Institute for Health and Productivity Management, based in Glen Allen, Va. The idea of looking at the full value of employee health appealed to me because it ran parallel to a healthcare concept I was already using -- whole-patient management.

The premise behind both approaches was similar: Consider people in their entirety so when a change occurs in one part of their lives, you follow how that impacts other life dimensions, including work.

Research conducted during the early IHPM days considered the impact of sedating antihistamines on employee productivity. In 2002, the Food and Drug Administration approved Claritin as an over-the-counter medication. While many saw this move as a boon for the uninsured, self-insured employers and insurance companies raised co-payments for their constituents to as high as $50 for the remaining prescription antihistamines. The idea was to force consumers to choose over-the-counter antihistamines.

What employers did not anticipate was workers often gravitated toward sedating OTC antihistamines for a variety of reasons. And the result was a statistically significant negative impact on business performance during allergy seasons. Ultimately, the recommendation was to move non-sedating antihistamines back into the pharmacy-benefit formulary.

In May 2004, The Wall Street Journal featured an article about Pitney Bowes after the company reported a $1 million savings three years after the it had reduced the employee co-payment for all asthma and diabetes medications to 10 percent. The savings generated from this benefits strategy came from improved drug adherence, which decreased emergency department visits and hospital admissions.

But after the initial flurry of studies like the two described above, pharmacy-benefit management seemed to migrate largely toward increasing co-payment percentages -- balancing between not-too-little and not-too-much -- and improving the use of generic equivalents.

That is, until recently. Once again, outsiders to the health and insurance industries are causing positive disruption, upon which employers can capitalize.

New Products Emerging

In 2009, the founders of New York-based Truveris saw an opportunity to help employers with everything from the front-end PBM design to back-end auditing.

Truveris solves several problems for employers: simplifying the request-for-proposal process for PBM services so an informed selection can be made in fewer than 30 days, making certain what is represented in the RFP makes it into the contract and creating a real-time PBM-invoice-review process.

TruBid, the Truveris RFP process, produces an objective scorecard that allows employers and/or their brokers/consultants to rank RFP results. The two-stage pricing exercise allows bidders to take a blinded look at how their product offering and pricing compares with their bid competitors and make adjustments. Another process, TruGuard, allows employers to easily review pharmacy bills prior to paying the PBM.

As more employers move toward "big data" collection and integration of pharmacy data with other data sets such as medical and absence statistics, Truveris can help them sort through the issue of who owns the data -- the employer or the PBM?

As A. J. Loiacono, executive vice president of sales and marketing, puts it, "Historically, even when the employer [was] self-insured, the PBMs claimed they owned the data." If this issue is not resolved during the RFP process, the employer may have to pay the PBM to gain access to its own data.

Truveris is making such an impact in the evaluation of PBM services that it was recently named one of 2013's "most disruptive private companies" in managed care and healthcare IT by Lazard Capital Markets.

At the other end of the pharmacy-benefit-management spectrum is the real client -- the employee. GoodRx has risen to the forefront as the champion of the consumer, especially those who are paying cash for their medications.

According to Doug Hirsch, one of the co-founders and chief executive officer of GoodRx, its mission is simple:

"We want to mimic companies like Orbitz and create prescription-drug-price transparency so consumers are informed and can afford the medications they need," he says.

Hirsch seems to have met his goal. The GoodRx website and smartphone applications are simple, clear and thorough. The user types in his or her location and the name of the prescription drug and is presented with prices for a variety of pharmacies in the immediate area, along with the cheapest online option. Savings tips on available manufacturer coupons along with GoodRx-negotiated coupons are shown as well.

In addition, GoodRx provides insight into options available for tackling individual medical conditions with prescription drugs. This allows the consumer to have a conversation with his or her physician about less-expensive treatment alternatives.

Why would an employer consider offering GoodRx services to employees? "Because employees and employers sometimes pay too much for retail and mail-order drugs," Hirsch says.

According to the FDA, nearly eight in 10 prescriptions filled in the United States are for generic drugs. And a growing list of $4-to-free generic prescriptions is now available from a variety of retail-pharmacy chains. These options are less expensive than the $10-to-$25 minimum co-pay for tier 1 drugs. GoodRx can readily find these options for employees.

The list of kudos for GoodRx includes plaudits from Consumer Reports, Fast Company and the Today Show.

Whole-Patient Approach

While Truveris and GoodRx help employers with the mechanics of the front-end, back-end and purchase of pharmaceuticals, the services are isolated fixes to pharmacy-benefit management. But is there a whole-patient approach available for employees and their dependents?

Terry McInnis, a physician and co-lead for the medication-management task force of the Washington-based Patient-Centered Primary Care Collaborative, is considered an expert on the pharmacy of the future and its role in the patient-centered medical home -- a much-discussed approach to ideal patient care during the healthcare-reform debate.

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"As employers move toward coordinated care for their employees," McInnis says, "they need to get smarter about silos." She goes on to explain that PBM vendors act as a silo focused on keeping drug costs down for employers.

McInnis says that good PBM vendors look for and manage duplicative therapies, drug-to-drug interactions and the use of generic drugs. What they miss is how the patient functions clinically and where the physician wants him or her to be for optimal health and performance.

When a physician employs comprehensive medication management, he or she systematically considers four things: Are the medications the patient is taking appropriate for the clinical goals? Are the medications effective? Are the medications safe? Is the patient adherent with the prescriptive mix?

Beyond a physician's working knowledge of medicine, a company such as Plymouth, Minn.-based Medication Management Systems Inc. helps physicians and employers assess all of a patient's pharmaceuticals, including the 30 percent to 40 percent of self-selected drugs such as over-the-counter and complementary and alternative medications.

Linda Strand is a clinical pharmacist, long-time professor at the University of Minnesota's College of Pharmacy, and a founder and vice president of professional services at Medication Management Systems. The company is based upon research she and others began in 1977.

"We worry about prevention from an employer's perspective," Strand says. Through her company's data-analytic capabilities, she and her team know what drug-therapy problems get in an employee's way.

"Compliance is only 10 percent of the problem with pharmaceuticals," she says. The No. 1 problem is patients aren't taking preventive drugs and the No. 2 issue is that patients aren't taking medications at the right dosage.

For employers, workers who are functioning at optimal levels are at work more often and consume fewer medical services.

Medication-therapy management is not needed for all employees. Strand's company focuses on finding the right employees and dependents to target by reviewing eligibility criteria, claims data and a variety of demographic measures, depending on the company and its goals.

Approximately 10 percent of employees are viable candidates for Medication Management Systems' intervention program, which involves a pharmacist who interacts with the employee in-person or telephonically, and the physician. The employee is then followed for what happens after the intervention.

Given disruptors such as GoodRx, Truveris and Medication Management Systems, HR executives have an opportunity to take a fresh look at opportunities for better managing the growing cost of pharmacy benefits and using a simplified experience for both themselves and their employees.

Carol Harnett, consultant, speaker and writer in employee benefits, health and productivity management, health and performance innovation, and value-based health, is the benefits columnist for Human Resource Executive®. She can be emailed at

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