The Basics of Pharmacy Benefit Management (PBM) Dominic Vu, Pharm.D., R.Ph. Director of Pharmacy Services

Background Memorial Hermann Health Plan (MHHP) is owned by Memorial Hermann Health System with the purpose of focused utilization of Memorial Hermann facilities and affiliated organizations. A Health Plan is a legal entity that provides for coverage of designated health services such as vision, dental, medical, and pharmacy services needed by plan members for a fixed, prepaid premium. Health plans are marketed directly to individual members and employer groups.

Objectives & Introductions Provide basic components of a PBM function and business model Define PBM relationship with Health Plans Understand formulary management Understand utilization management programs Manage Care impact for students Q & A

What is a PBM? A Pharmacy Benefit Manager (PBM) is a third party vendor that provides programs and services designed to maximize drug effectiveness and contain drug expenditures.

Do you work for a PBM? NO. They work for me. A PBM seeks to do business with Health Plans to manage the Health Plan’s pharmacy or medical drug benefits. Director of Pharmacy Service owns the vendor relationship and ensures quality of service for delegated functions.

What Services do PBMs provide? Serve as middleman between health plans and wholesalers or pharmaceutical companies Administrative services in processing and analyzing prescription claims Contracting with a network of pharmacies Negotiating rebate arrangements Developing and managing formularies and prior authorization programs

What Services do PBMs provide? Operating mail order pharmacies and mail order claims Maintaining clinical programs to ensure patient compliance Performing drug utilization review Offering specialty pharmacies and distribution services

How does a PBM work?

Key Pharmacy Terms NDC – National Drug Code Number assigned by FDA to identify drugs marketed in the United States. AWP – Average Wholesale Price National average of list prices by wholesalers

How do most PBM earn their income?

Tiered Formularies Drugs are placed on a tiered benefit plan design according to clinical and cost data MHHP offers 4 and 5 tier plans Drugs placed on Tier 1 and 2 have the lowest copays and are typically generics or lower cost branded drugs Drugs on higher tiers have higher copays and typically are most costlier and/or specialty drugs

Utilization Management Programs These programs include: Prior Authorization Quantity Limit Step Therapy Dose optimization Fraud, Waste, and Abuse Opioid Management Compound drug management

Factors Influencing Pharmacy Trends

This piqued my interest Where can I learn more? Is this right for me? How do I know? I’m only a P2/P3 student.

The power of Google

Minimum Skillset for Success At a minimum possess the following: •  Knowledge, decision making, and critical thinking abilities   •  Communication abilities •  Leadership abilities •  Lifelong learning abilities •  General business management abilities   Managed Care offers a unique mix of business and clinical opportunities.  

For more information: Dominic.Vu@memorialhermann.org