The American Journal of Pharmacy Benefits

Drivers of Change in Pharmacy Benefit Management | Page 2

Published Online: June 20, 2014
Jan Berger, MD, MJ; Louis L. Brunetti, MD; Robert DaSilva, RPh; Shareh O. Ghani, MD; Kevin Hirsch, MD; Mumtaz Ibrahim, MD; Michael Kobernick, MD, MS, FAAEM, FAAFP; Robin J. Richardson, RPh; Scott Schnuckle; Justin Weiss, PharmD; and Richard Bankowitz, MD, MBA, FACP
“Ultimately, the most important aspect of the HIEx world is premium price over the next few years. Plans must offer a competitive priced benefit with the right amount of drug coverages that are not overly burdensome for consumers. UM (utilization managment) criteria will be permissible, but the administration of the criteria needs to be consistent and simple. For example, PAs (physician assistants) should be considered only tied to diagnosis and labs and take out the multiple levels of questions and complexity.”

Another participant cautions about the many hard-tocontrol external risks that may frustrate payers’ efforts: unabated cost trend in specialty drugs; potential for costshifting from the public to private sector; and benefit designs that can deliberately force members out of employer- sponsored plans onto health insurance exchanges, resulting in “lemon-dropping” of older and sicker workers onto the exchanges.

“In addition to the pharmacy costs, the aggregate cost of medical coverage is a threat to pharmacy coverage and other healthcare (eg, dental and chiropractic care). While we have not yet seen federal guidance on large group minimum value and minimum essential coverage, what we learned from PPACA is that large groups do not necessarily have to cover all of today’s plan services—they just can’t have any lifetime or annual maximums on those services that are part of the essential benefit set and the plan value on covered benefits must meet the actuarial value of 0.60. Thus, a likely way for groups to cut costs, yet still avoid employer mandate (“shared responsibility”) taxes, will be to carve out services when allowed. For self-insured business not subject to state mandates, some employers could start with chiropractic or durable medical equipment. In time, self-insured employers in industries where they do not have to use benefits to attract and retain skilled workers could eventually carve out specialty drugs, brand drugs, or maybe even all prescription coverage. The rationale here would be that employees needing these services would be better off buying guaranteed issue individual coverage.”


“This is a pretty extreme benefit approach and not something we will see for 1/1/2014. It’s also likely that there could be future legislative action to eliminate the ability for plan sponsors to remove coverage for pharmacy benefits entirely, but in the meantime, given the cost pressures, this is a possibility. To avoid it, we believe selfinsured plan sponsors should be looking at more restrictive formularies and networks and health and wellness initiatives to bring down their pharmacy spend. Another concept is a more ‘defined pharmacy benefit’ approach in which the plan only pays up to a certain fixed amount for prescriptions—this approach would require excellent transparency tools and would likely not be well received by members relative to other approaches.”

Another respondent takes a longer view, acknowledging uncertainties and challenges:

“Don’t panic; don’t overreact as everyone is in the same ‘boat.’ There are so many variables in 2014: [W]hat will be the cost of plans, how much enrollment will the exchanges really get , will the young, low cost members stay out, what will small employers do, drop coverage etc. Beyond 2014, there are several other significant milestones that are going to impact medical benefits, including pharmacy benefits. Those milestones are health insurance being able to be sold across state borders by 2016, large groups being able to join the exchange by 2017 and the 40% excise tax on high-cost, employer-sponsored health benefits in 2018.”

Implications of Findings

Healthcare stakeholders must remain vigilant about managing costs with all of the tools in the arsenal. The role of pharmacy is evolving and increasing in importance. There is an emerging market imperative to integrate pharmacy and medical services to optimize not only patient outcomes but the economic return on investment.

A wave of macroeconomic variables is flooding the market, dramatically impacting pharmacy benefit management. Waning employer commitment to providing health benefits may trigger not only higher overall healthcare costs but adverse selection in group and individual exchanges. Familiar managed care techniques to counter thes forces and their impact on pharmacy include:

  • Narrow pharmacy networks

  • Integrated care programs targeted to chronic diseases

  • Medication therapy management

  • Trend management tools for specialty pharmacy drugs

  • Measurable end points for clinical programs to monitor success

  • Innovative pay-for-performance models to reimburse pharmacists for cognitive services

Next Steps for Drug Benefit Plan Sponsors

The sponsors of drug benefit programs in all segments of healthcare must continue to look to the future. Critical action steps include:

  • Remaining nimble as healthcare reform unfolds

  • Continuing to plan to ensure your organization is equipped to respond to market dynamics

  • Monitoring emerging trends in healthcare, population management and outcomes measurement

  • Engaging members today to be prepared for greater member responsibility in the future

  • Gaining greater understanding of how to use health data so there is better comprehension of the populations for whom they manage care and/ or sponsor benefit programs

  • Developing the ability to integrate data from a variety of sources across the entire care continuum to facilitate a more fully functional integrated healthcare system

Take-Away Points

  • Impact of healthcare reform is evident in regulation, clinical services, and economics of pharmacy benefit management.

  • Pharmacy and medical care must become more integrated to create economically sustainable drug benefit management programs for the future.

  • Managed care techniques, including narrow pharmacy networks, integrated care programs, medication therapy management, cost trend management of specialty pharmacy drugs, and pay-for-performance models will help mitigate the potential adverse impacts of healthcare reform.
Author Affiliations: Premier Healthcare Alliance, Washington, DC (RB); Silverlink Communications, Burlington, MA (JB); Blue Cross Blue Shield Advantage, Phoenix, AZ (RD); Magellan Health Services, Phoenix, AZ (SOG); Scripps Health, San Diego, CA (KH); SummaCare Health Plan, Inc, Akron, OH (MI); Ascension Health, Detroit, MI (MK); ODS Health Plans, Portland, OR (RR); HealthPartners, Minneapolis-St Paul, MN (SS); Superior Health Plan, Austin, TX (JW); Intellus Consulting, San Diego, CA (LLB).

Source of Funding: This study was sponsored by MedImpact Healthcare Systems, Inc.

Author Disclosures: With the exception of Dr Bankowitz, Mr Schnuckle, and the corresponding author employed by MedImpact, each author received an honorarium from MedImpact for the time invested in research. The authors reviewed and approved manuscript.

Authorship Information: Concept and design (LLB, SOG, MK, SS); acquisition of data (SOG, LLB); analysis and interpretation of data (LLB, MK, JW); drafting of the manuscript (LLB, RD, MI, RJR, JW); critical revision of the manuscript for important intellectual content (JB, LLB, RD, KH, MI, MK, SS, JW, RB); provision of study materials or patients (LLB, KH); obtaining funding (LLB); administrative, technical, or logistic support (LLB); supervision (LLB).

Address correspondence to: Dana H. Felthouse, MBA, Vice President of Business Development, MedImpact Healthcare Systems, Inc, 10181 Scripps Gateway Ct, San Diego, CA 92128. E-mail: dana.felthouse@
Issue: May/June 2014
More on AJMC.COM