Where Payers Fit in the Pharmacy Benefits Ecosystem [Video]

Video Transcript

In order to figure out the best pharmacy benefits strategy for your self-funded clients, you have to understand who the players are, what influences those players, and then try to determine how to best position your clients, to succeed in the environment that we live in. This discussion is intended to help you understand where the payers fit relative to other parties and what tools they can use to be part of the discussion.

Key Drivers of Prescription Decisions

Most prescriptions are decided upon by the patient and the provider, presumably the provider who has clinical knowledge driving that discussion. It’s really those two people who decide what prescription gets written, what gets filled, and what ultimately gets paid for. In this representation, you’ll see the pharmacy listed here. Years ago, I would have said that the pharmacy has relatively little impact because by the time something gets to the pharmacy, a decision has already been made, but specialty pharmacies now have a lot more influence. They now represent 50% of the costs, so I would say there is a growing amount of influence that the pharmacy could have on what gets dispensed, when, and how.

Influencing the Decision vs Paying the Bill 

Outside the immediate environment of the point of care and the point of dispensing, there are other parties who have an influence on what gets prescribed and when. The pharmaceutical manufacturers have a relationship with patients through direct-to-consumer advertising, and a very strong relationship with prescribers. They are there from the time they go to med school until they hang up their stethoscope, helping provide them with information about the clinical wherewithal of their products. They also have a relationship with the PBMs. They work with PBMs to get their products on formularies, and to pay rebates. Some of that rebate revenue stream is part of the PBM’s revenue model and some of it eventually makes its way to the payer. They also have a relationship with the pharmacy, particularly when those pharmacies are specialty pharmacies, through procurement discounts. They’re heavily influencing their position in the marketplace and how they can increase their market share.

PBMs interact with the immediate circle through the point of dispensing. They have a claim payment system, and that claim payment system really decides what gets paid or doesn’t, based on formulary, clinical rules. You can see that the payer is not represented in that immediate point of care, point of dispensing, nor in that collateral circle where we have the manufacturer and the PBM. How does a payer get into a position to influence what’s going on?

Shifting the Balance for Clinical & Economic Value 

Their one ticket into the show, so to speak, is through the PBM. If you’re a smaller employer – and even if you’re a larger employer – having the ability to navigate the world of the PBM to make sure you are getting good rates, good rebates, and to make sure you are getting good utilization is essential. Can you do that? Can you manage that on your own?

The nice thing about RxBenefits is that we’re able to take the power of all our employers we work with to leverage the PBM to allow us to provide better rebate contracting and better network discount rates, but also better clinical program management. We can influence the removal of low clinical value drugs, or we can influence having the PAs pulled away from the PBM so they can be done in an independent and transparent manner. There are a lot of things that we can do to help that employer now have goal alignment with some of the parties in the inner circle. A better way to say it, is to make sure that others within that primary circle and the secondary circle have more alignment with the employer.

That being said, drug manufacturers are not good or bad. PBMs are not good or bad. Their intent is to promote drugs that are clinically appropriate. Patients and physicians are generally good people. Again, their intent really is to focus on clinical efficacy. But none of those parties focus necessarily on the economics of a decision. Manufacturers don’t go in to detail their products to a physician and talk about the cost of their medications; they talk about the clinical efficacy. Oftentimes doctors are unaware of what the relative cost of a medication is, and so a drug like Duexis might seem appealing to a doctor because they have coupons and their member wouldn’t have to pay a copay for it. Duexis can cost $2,600 and the alternatives over-the-counter can cost $20.

This kind of disparity exists in the world today, and it certainly doesn’t align with the employer’s goal. Our goal is to make sure that we can be inserted in a way that can help neutralize that and put the employer inside that decision-making process in a meaningful way to help reduce costs.

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