Pharmacy Benefit Managers (PBMs) Dimitry Gotlinsky Western University Managed Care Clerkship ProPharma Pharmaceuticals Consultants, Inc. 5/2/2006

What are PBMs? Rising health care costs have forced employers and health plans to develop methods to manage costs PBMs-are private companies hired by employers and health plans to help administer drug benefits

PBM’s function Purchase and dispense medications Pay claims Financial intermediary between pharmacies and plan sponsor Manage prescribing choices Maintain pharmacy networks

PBM’s added services Real-time medication check PBMs conduct electronic clinical reviews before medications are dispensed Prescription is checked for: ●Drug-drug interaction ●Drug-age interaction ●Appropriate dosage ●Excessive utilization ■ Pharmacists at point-of-sale receives a real time alert

Why is there a rise in PBMs 3 main reasons: 1)Number of RXs per person increases 2)Newer, higher costs RXs are replacing older, less costly medications 3)The prices of RX drugs are increasing

Most Dominant PBMs Caremark, Inc. (merged with Advance PCS)-90 million covered lives Medco Health Solutions, Inc.-60 million covered lives Express Scripts, Inc-40 million covered lives

Focus of PBMs ■ Negotiate the customer’s ultimate cost a) reimbursement to retail pharmacy b)payment to manufacturer of the drug ■ Establish network of participating pharmacies ■ Negotiate rebates with drug manufacturers

Who is in charge? Ultimately, the health plan is in charge PBMs are not wholesalers and do not generally purchase and sell RX drugs But, many PBMs own a mail order pharmacy

Problems with PBMs PBMs are paid for services which are not considered rebates Use of call centers to actively encourage doctors to switch individual patients to preferred drug Refusal to disclose information on the prices they pay for drugs, as well as the rebates amounts

Problems with PBMs continued Collection and sale of PBM data on patients Pharmacy spread-the difference between the price charged health plans and the price paid pharmacies Mail-order pharmacy

Pharmacist’s Role in PBMs 3 Clinical Interventions A)Therapeutic Interchange B)Medication Adherence C)Therapy Management

Pharmacists Role Goals Increase quality of care to members Promote appropriate drug therapy Enhances medication compliance Improves preferred drug compliance Increases utilization of cost-effective pharmaceuticals

Things to ask for when selecting a PBM Does the PBM uses the same AWP in calculating price to clients and payments to pharmacies? Are there any other payments a PBM gets from drug manufacturers besides rebates? How often a PBM changes their formulary?

More questions to ask How are co-payments set? Ask for detailed disclosure and explanation of a PBMs fee schedule What is PBM’s policy on selling pharmacy data?

Duties to be performed by the client in the contract Must provide a PBM with : ● Eligible member list ● Benefit plan information ●Notification requirements ● Provision of Eligibility Info ● Business development

In Summary PBMs manage the majority of prescriptions that flow through health care system PBM industry has evolved from small claims processing firms to more concentrated industry with comprehensive service offerings Keep in mind that PBMs are a for-profit business Not always looking out for the best interest of the client or patient