PBM Industry Goals: Higher Growth and Affordable Prescriptions

In a recent Gallup poll that asked what adults in the United States perceive to be the most important issues facing the country, one of the top two responses was healthcare, with nearly 20% of all responses. .

Annual U.S. spending on prescription drugs exceeds $ 450 billion, the most per capita of any other

nations are coming. As we mentioned in a previous blog post, “The Rising Costs of Specialty Drugs,” Americans spend about $ 1,200 on prescription drugs each year, an amount that has grown rapidly over the past few decades.

Costs are particularly high for specialty drugs, which cost an average of $ 4,500 per month. This is the main reason why one in four people have trouble paying for their medication.

Enter the Pharmacy Benefit Managers (PBM). PBMs administer drug plans to more than 266 million Americans with health coverage and attempt to manage prescription drug costs by negotiating with or helping drug companies to optimize their drug formulations. speciality. Working on behalf of health insurers, Medicare Part D drug plans, large employers and other payers, the goal of PBMs is to increase access to prescription drugs while reducing the increase costs.

The PBM process

According to the Pharmaceutical Care Management Association (PCMA), PBMs reduce drug costs by offering Amazon-style home delivery of drugs and creating more affordable select pharmacy networks, along with these seven key ways:

• Negotiate discounts with drug manufacturers

• Negotiate pharmacy discounts

• Offer more affordable pharmacy channels

• Encourage the use of affordable generics and brands.

• Reduce interactions between waste and drugs

• Improve membership

• Management of high cost specialty drugs

Industry expansion

As the Colorado Institute of Health notes, PBMs were established in the 1960s and specialize in processing claims at low cost. They monitored prescription drug claims coming in from pharmacies, set co-payment levels for members, and decided which pharmacies would be in the network. The PBM industry developed around 1990 establishing a business model that required manufacturers to compete on price in various categories of drugs.

Further diversification of the PBM industry occurred after the enactment of the Medicare Modernization Act 2003, which included the establishment of Part D Medicare. As a recent article explained. from BenefitsPRO, “Medicare Part D enrollments have exploded over the past 15 years, and Medicare relies heavily on PBMs ... to absorb risk. "

Factors that have contributed to the expansion of the PBM industry include:

• Growing market consolidation

• Digital health solutions

• Expansion of specialty pharmaceuticals

• A shift to value-based contracts

• Greater participation in the management of high-touch care

It also relies on employers, unions and other healthcare payers to provide customizable clinical and operational services that improve the safety, quality and affordability of care for patients using specialty drugs. In addition, increased media and policy-makers' attention to prescription drug pricing has drawn more attention to the role of PBMs.

Substantial savings

How do PBMs benefit consumers of health services? These figures highlight the savings available through the PBM industry:

• PBMs are expected to save employers, unions, government programs and consumers $ 654 billion in drug insurance costs over the next decade.

• As of 2020-29, current use of PBM tools will save health plan sponsors and consumers over $ 1 billion.

• PBMs Save Patients and Plans $ 10 Per Generic Prescription, $ 123 Per Brand Prescription and $ 1,593 Per Specialty Prescription

• Access to payer, physician and specialty benefit PBM and pharmacy data enables specialty pharmacies to develop highly customizable programs and services that drive up to 50% difference in cost trends.

• PBMs save payers and patients 40-50% on their annual prescription drugs and associated medical costs, compared to what they would have spent without PBMs.

• PBMs save payers and patients an average of $ 941 per person each year.

• PBMs save the healthcare system on average $ 6 for every $ 1 spent on PBM services.

Perks of a peer review partnership

By joining with payers, peer review partners support PBMs in their goal of benefiting healthcare consumers. An accredited independent review body can help identify trends to improve processes, for example by determining exceptions for specialty drugs for clients during the review process. In addition, they collaborate to ensure that treatments align with plan language, jurisdictional requirements and/or evidentiary guidelines for efficacy, safety and value.

SpectrumPS 'review expertise benefits our clients by guiding them through the maze of challenges presented by specialty drugs. We help them incorporate evidence-based and regulatory guidance into their formularies and ensure their members' drug regimens are based on medical criteria, guidelines, and research.

Because our nationwide network of reviewers must match patient needs with the language of health plan benefits, we are able to manage each case by medical reviewers who are experts and have access to the latest research and guidelines.