Investing in Health

Pharmaceuticals represent between 10 to 20 percent of health care spending; however, the effective use of pharmaceuticals can greatly impact the remaining 80 to 90 percent of spending. Because of this, pharmacy benefits need to be managed as an investment in preventing more costly medical procedures and hospitalizations. By strategically utilizing pharmaceutical spend to reduce total health care costs, employers get the most out of overall health care dollars. This is where PBMs play a critical role.

PBMs serve as third-party administrators of prescription drug programs. We work on behalf of health plans, employer groups and unions. We assist health plan members with accessing their pharmacy benefits and help plan-sponsors manage drug spend. Key PBM services include developing and maintaining formularies, contracting with pharmacies, providing clinical and benefit design support and managing mail pharmacies.

Benefits of PBM solutions
In the past, PBMs focused on pharmacy benefits, and health plans focused on medical benefits. In the most effective operating model today, the PBM and health plan have integrated programs. With aligned programs and objectives, the entities can focus on delivering the most effective health care at the lowest cost.

In many disease categories, increased prescription adherence has been demonstrated to result in healthier outcomes and a reduction in overall health care costs. Ensuring that people who need drugs take them increases drug costs in the short-term, but also reduces overall costs in medical complications and hospitalizations in the long-term. 

Another critical benefit provided by effective PBMs is drug trend management. This involves leveraging competitive pricing for the lowest net cost, providing insightful benefit design and utilization management solutions, and making recommendations for effective consumer-focused tools and programs.

A good PBM will work with its client base to balance short-term and long-term results in both quality health care and cost control.

Industry changes
With rising consumerism and the impact of aging baby boomers on US demographics, we believe there will be an increased focus on prevention and wellness that PBMs are uniquely positioned to address. We also anticipate individual consumers will play a more impactful role in their health decisions and increase their demand for real-time and interactive information. Employers will also seek new funding mechanisms and incentives that encourage members to be better health care consumers.

The need to curb rising health care costs will challenge plan sponsors to take a combined view of their health plan and PBM to effectively manage total health costs. We believe the rising costs in specialty pharmacy (high-cost injectable and biotechnology drugs) and patients’ need for more hands-on pharmaceutical care, will cause a progressive shift toward more integrated medical/pharmacy benefit designs. PBMs will come to be viewed as an investment in health and expectations for PBM/health plan alignment will increase.

Choosing your PBM
The right PBM for an organization has moved even further beyond the focus on transparency and is in complete alignment with an employer’s goals. A PBM that is integrated with a health plan is best positioned to help an employer achieve cost containment and health care objectives. By selecting a PBM and health plan partnership that is focused on the total health of employees, both the employer and the employees receive better value and more measurable and meaningful results than they would with standalone health, wellness and pharmacy programs.

About Tim Dickman
Tim Dickman is President and CEO of Prime Therapeutics LLC, a pharmacy benefit management company located in St. Paul, MN. Prime is owned by 10 Blue Cross and Blue Shield Plans throughout the nation and serves approximately 14.6 million members.