• Center on Health Equity and Access
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Evolving Management of Drug Spending Monitoring


The potential for cost savings and future management of drug spending monitoring across medical and pharmacy benefits through integrated care is examined.


Neil B. Minkoff, MD: I see Cheryl smile knowingly. It’s following that longitudinal history of benefit carve-in and carve-out. I wanted to get your feedback on that, and then I want to pose a follow-up question.

Cheryl Larson: I appreciate what Eric is saying, that back in the day, health plans were responsible for everything, and one of the big stories was about integrative care, and it did make sense. Then PBMs [pharmacy benefit managers] came along, and I could talk about the history of that for a long time, but I’m not going to. They said, “We can do it better.” We said that employers were complying with the ACA [Affordable Care Act], so they weren’t on top of their game. The PBMs decided that they were going to do things differently, and they said, “We’re going to be a lot less transparent, and we’re going to make a lot more money.”

I have some members who are going back to the health plans and doing it old-school again because they are able to look at that medical and pharmacy data together; the reporting is together. It is frustrating for them to not have a window into the medical benefit, and the reports they get are high level, and we’re hoping we can get that to change in the future. If only the PBMs had done what they said they were going to do; they of course will say that they saved employers a lot of money. The rebate game and the other shenanigans have had an impact. I see us moving slowly but possibly toward a trend of reintegrating the benefits under 1 roof, but I encourage the major carriers out there to be more transparent, so that the employers can say, “Now I understand why you wanted me to do this.”

Neil B. Minkoff, MD: You segued right into my follow-up question already. Would it make sense from your point of view as somebody trying to get all this information? You’re representing the nongovernment bill payers, so you’re representing that part of the industry. Would it makes sense for more to channel through the pharmacy benefit so you have one-stop shopping to try to see what’s going on with drug cost as well as the adjuvant to the drug cost, the infusion cost and so on? If all that channeled through 1 benefit, would that be easier? Would it be problematic for the rest of you to implement something like that?

Cheryl Larson: Start with that. For years, PBMs have wanted to own all of the drugs through the medical benefit because that would be more profitable for them; if they could do it in such a way that they were truly passing it on. Today, when we work with employers, our PBM contracts have to be transparent. We remove all the things that are misaligned from their responsibility. We keep all the discounts and all the rebates if there are any with the model being used. But a vast majority of employers are not doing this. They don’t even do this.

Neil B. Minkoff, MD: When the PBMs have talked to you about having all of that funnel through them, does that also include the infusion costs, the visit costs, and other associated costs with it, or is it just the drug cost?

Cheryl Larson: I think it’s just the drug cost, but I don’t know. I’m sure there are some employers who have had discussions with PBMs about owning those other pieces, but most employers would think those are still better off through the medical benefit because of the way the care is delivered. Right now, you haven’t had enough employers saying, “I’m onboard with all drugs running through the pharmacy benefit” because they’ve been disappointed about the lack of transparency. There’s a lack of transparency on the carrier side, but at least they’re having a better understanding, and they know that the carrier is trying to better manage costs. It’s a tough pill to swallow when, back in the day, your P&T [pharmacy and therapeutics] committee would make recommendations, and it would then go to a business committee. The business committee decided what went on formulary, and that was based on rebates and other things. Maybe I shouldn’t have said that, but it’s too late; it’s out there. There may be a trend. If carriers can become more transparent and prove that the integration has value, and it does have value, then I don’t see it shifting over to pharmacy benefits. A lot of people don’t agree with me.

Neil B. Minkoff, MD: Kevin, let me ask you about your opinion here because this gets into a future state. What should this look like in terms of being able to manage infusion versus injection? How do you think that we’re going to be able to get to the point of integration where we’re looking at the ideas that we looked at in the Gabriela Dieguez study earlier? It isn’t just about the cost of the drug; it’s the cost of everything associated with the cost of the drug.

Kevin U. Stephens, Sr, MD: You ask a good question, Neil. To wrap up what Cheryl, Michael, and Eric said, I think about our future. If I had a crystal ball, I don’t, but if I had one, what I would put in it would be transparency on all parties. The way to do that is that, when you look at large group employers and even small group employers, we know what the profiles of their employees are. We know how many patients have MS [multiple sclerosis], how many have cardiovascular disease, and how many have diabetes. We can tell you the profile. We can also tell you, historically, what their drug utilization patterns have been. As we then design our benefit for the next year, we can look at the total cost of care based upon the specific employer.

It makes a difference if you’re an IT [information technology] company versus a construction company versus schoolteachers. The employee mix, their make-up, the health care indicators, and even where you live geographically all matter. We have different populations and different risks of different diseases. When we can put them all together, we can look at the risk profile of the employers, and we can look at the providers and the incentives and disincentives. We can look at the payer, and we can look at all this stuff together. We have to say that, for this group, it may be a medical benefit, for this other group, it may be a pharmacy benefit because of the geographic location.

If you are located in the middle of the desert, and you don’t have any providers close by for your population, then you need to change the program that you offer based upon your purview. I always say when I get into meetings, I say, “OK, fine, everybody take out your guns,” and then they will do that, which is not a problem. I say, “Put your gun on your table,” and they will do that pretty easily. The hard part is to take your hand off your gun and give your gun to me, and that’s when you get the problems. Everyone love their security, so so until we can do something like that, it’s going to be a continued problem because it won’t work well.

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