PBM's Role in the Industry PDF

PBM’s & their role in our industry A history + why we MUST educate our accounts about why they are completely unnecessary  How do PBM’s affect our business? It’s simple- they’re unnecessary & often cause prescription delays for injured workers. Put...

PBM’s & their role in our industry A history + why we MUST educate our accounts about why they are completely unnecessary  How do PBM’s affect our business? It’s simple- they’re unnecessary & often cause prescription delays for injured workers. Put another way, if the PBM programs offered by WC insurance carriers worked, we wouldn’t be in business. YOUR challenge is to make sure that our referral sources are educated about the dangers of PBM’s. Ultimately, they MUST realize that using us is not only acceptable, but preferred. If your referral sources don’t understand about PBM’s, then they cannot fully understand our value proposition. PBM’s & their role in our industry Part 1: What is a PBM?  What is a PBM? PBM = Pharmacy Benefit Manager. are third party companies that function as intermediaries between insurance providers and pharmaceutical manufacturers. PBMs create formularies, negotiate rebates (discounts paid by a drug manufacturer to a PBM) with manufacturers, process claims, contract with pharmacies by creating pharmacy networks, review drug utilization, and occasionally manage mail-order specialty pharmacies. In 2023, the true role of a PBM is to contain medication costs on a claim and also to make as much $$$ as possible on the processing of prescriptions.  What is a PBM? (continued) A PBM manages pharmacy benefits under an insurance plan. An insurer, or a self-insured company, or even the federal government, hire PBMs to handle the pharmacy aspects of their insurance plan - from contracting with pharmacies, to negotiating discounts and rebates with manufacturers, to processing payments for prescriptions. PBMs take on the role of administering all aspects of a benefit (prescriptions) on behalf of the insurer, and more notably, they help control and reduce costs for insurers. How exactly do they control costs? Those contracts and negotiated rates mentioned above, they are supposed to translate into lower costs for the insurer when it comes to prescriptions for their insured. PBMs negotiate rebates and deals with drug manufacturers and these negotiations are what determine if a certain drug is covered by your prescription plan or excluded. These rebates and deals theoretically mean an insurer is paying less for a prescription drug than they would without the PBM. Additionally, PBMs often operate pharmacy networks, in which they have a series of pharmacies they contract with to not only offer a patient access to their medications, but at a discounted cost to the insurer. They contract with those network pharmacies to cover prescriptions at a reduced rate, and in return, the PBM instructs their patients to utilize those pharmacies. The pharmacy accepts a lower rate for a prescription than they would for someone not covered by that PBM but in return they are provided a stream of patients. What is a PBM? (continued) In recent years, PBM’s have expanded beyond processing medications, and they now run their own mail-order & Specialty pharmacies. Even more recently, they have begun merging with insurance carriers, which tilts the “playing field” in healthcare by allowing massive healthcare systems to dictate where and how billions of dollars are spent. Experts generally agree that these companies play a role in driving up drug costs for some US patients, even as they negotiate discounts with drugmakers that benefit others, and that the amount of secrecy about their financial arrangements warrants scrutiny. What is a PBM? (continued) PBM’s often rely on proprietary drug formularies, beyond those required by certain states. These formularies aren’t published and can include denial/non- approval triggers for certain cost thresholds or pill quantities. A GREAT example of just how convoluted a PBM’s protocols are can be found here: https://workcompauto.optum.com/content/dam/owca/master-assets/ docs/work-comp-drug-list.pdf  PBM’s & their role in our industry Part 2: A brief history of PBM’s + the current landscape of PBM’s  The Evolution of the Modern PBM 1968- the first PBM was founded when 2004- the FTC declares that PBM’s operate with “vigorous competition” Pharmaceutical Card System Inc. (PCS, later AdvancePCS) invented the plastic benefit card. Since 2006, drug prices have risen 313%, in part as a response to the growing influence and 1970’s- they served as fiscal intermediaries by practices of PBM’s adjudicating prescription drug claims via paper 2007- CVS acquires Caremark PBM 2011- OptumRx is founded by UnitedHealth 1980’s- began adjudicating prescription drug Group claims via electronic transmissions. Most 2011- Maine repeals a 2003 state law that revenue for PBM’s was gained via claims mandated fiduciary- disclosure on PBM’s. As a processing fees result, many PBM’s refused to do business in Maine 1989- PBM’s manage prescriptions for 2012- Express Scripts & CVS Caremark approximately 60 million Americans transitioned from using tiered drug formularies, and instead began excluding drugs from their 1990’s- “merger madness” beghins formularies 1994- CVS launches PharmaCare, which it 2020, total gross expenditures for branded medications reached 517 billion. Manufacturers would later merge with Caremark earned only 31% of this spending, while PBM’s 1995- PBM’s manage prescriptions for 100 earned 69%. Around 2021/2022- PBM’s encounter increased million people scrutiny, including federal oversight 2023- Approximately 270 million Americans 2003- PBM’s manage prescriptions for 200 receive prescriptions via a PBM million people  The Landscape of PBMs One pharmacy benefit manager makes up one-third of the market, according to a May 23 report from Drug Channels. The leading PBM by market share is CVS Health's Caremark, the report found; it analyzed equivalent claims managed in 2022. Six PBMs accounted for 96 percent of the market share, and the top three made up 79 percent. PBM’s “cover” approximately 270 million Americans Here are the biggest PBMs by 2022 market share, according to Drug Channels: CVS Health / Caremark: 33 percent Cigna / Evernorth / Express Scripts: 24 percent UnitedHealth / OptumRx: 22 percent Humana Pharmacy Solutions: 8 percent Prime Therapeutics / Magellan Rx: 5 percent MedImpact Healthcare Systems: 4 percent Other PBMs: 4 percent *** Only about 50% of WC medications that go through a PBM are authorized immediately.*** NOTE: The data does not account for claims management that smaller PBMs outsource to these companies, the number of lives covered through rebate negotiations or discount cards. PBM’s & their role in our industry Part 3: How a PBM makes money + why they are a bad thing for injured workers  PBM problems There are antitrust issues regarding PBMs that are owned by drug manufacturers; Rebate arrangements, subsidies, and administrative fees paid by the manufacturer to the PBMs that are not fully disclosed to clients, thereby providing no way to assure that the savings are being passed on to the clients; Formulary development by PBMs that may favor a manufacturers’ more expensive drugs in light of the manufacturer’s financial leverage; and Drug-switching by the PBMs to either a generic or different brand name drug instead of the drug prescribed by the treating doctor. In addition to the federal investigation, health plan representatives have filed numerous lawsuits over the past several years. The lawsuits generally allege that the PBMs: Force health plans and health care consumers to pay inflated prescription drug prices through patterns of illegal, secret dealings with drug companies; Reaped billions of dollars in profits by steering health insurers and health care consumers into reliance on more expensive prescription drugs; Negotiated rebates and discounts from drug manufacturers and discounts from retail pharmacies that were not passed onto health plans and consumers, but were used instead to increase their own profits; and Use anti-competitive practices against small independent pharmacies.  PBM’s & their role in our industry Part 4: How various stakeholders in the WC world view PBM’s  The benefits of a PBM (from a PBM’s perspective) - PBM’s manage the costs associated with prescription drugs - Offer an easier experience for injured worker’s when filling WC medications - Increase access to medication - Offer multiple opportunities to earn revenue (via “spread” pricing & rebates)  The benefits of a PBM from an insurance carrier/TPA’s perspective) - Manage the costs associated with prescription drugs/reduce Spend on medications for injured workers. - Offer an easier experience for injured worker’s when filling WC medications. For example, they often have a “first fill” program and they always send out pharmacy cards to injured workers. - Decrease the amount of time an adjuster spends dealing with claimant medications - PBM’s often provide “utilization review” for high $$$ prescriptions, which may reduce the spend on high-risk claims  The benefits of a PBM (from a patient/referral source’s perspective) - Patients (& their referring medical providers/attorneys) often believe that they MUST use the PBM to obtain their WC medications. - Sometimes they DO offer quick fills, but often fills take longer because of using the PBM. Again, only about 1 out of every 2 medications are authorized  The benefits of a PBM (from our perspective) - They’re a tool of the insurance carrier- most denials or non- approvals go unchallenged, which means the insurance carrier does not pay for those prescriptions - They’re unnecessary. We process prescriptions differently than most pharmacies. We fill, then paper bill via the PBM. Chain pharmacies bill, wait for approval, and THEN fill - They hurt patient care/clinical outcomes, due to administrative burdens - The benefits offered are illusory. For example, take the prescription card. It can be revoked at any time, and using it NEVER guarantees that a prescription is filled Questions?