The Right Prescription

The need for flexibility and value for money are essential to how PBMs are implemented. HRM sat down with six industry leaders to find out more: Dr Mark Campbell of Innoviant Inc., Renwyck Elder of WellPoint NextRx, US-Rx Care’s Taeho Oh, Bob Nease of Express Scripts, Sharon Murillo of Serve You and Rx America’s Mark SantaCroce.

HRM. What benefits can a PBM solution provider offer to employers and individuals?
MS. If a PBM is a partner rather than a vendor, there is great value for clients and members. A PBM also provides advanced offerings in specialty medication and home delivery. When drug costs are managed by maximizing generics rather than rebates, everyone wins.

Specialty medication is another area where PBMs can help employers design their benefits and programs to control costs. RxAmerica’s specialty program is unique because our specialists call their members every month to discuss any side effects they are experiencing and schedule the delivery of any refills.

BN. PBMs should make a significant difference in five critical areas. The first is driving lowest-cost drug mix wherever possible. This saves money and has a substantial effect on a plan’s trend; for every one percent increase in the generic fill rate, there’s a corresponding one percent or more decrease in plan cost. Next, PBMs should maximize therapy adherence in key drug classes, where it’s critical to sustaining health and preventing serious and costly medical problems. Third is encouraging greatest use of the most cost-effective delivery channel, and fourth is ensuring uncompromising safety.

Finally, a PBM should ensure members are engaged and satisfied with the benefit. When members are engaged, they’re more likely to read communications, participate in educational programs, and respond to calls to action. When members are, plan sponsors can make changes to the plan without excessive concern about member noise.

RE. PBM solution providers can offer the same basic and important benefit to both employers and individuals: access to quality, affordable pharmacy benefits. At WellPoint NextRx we know that for employers, pharmacy benefits are a cornerstone of the benefit packages they offer their employees – and getting the best plan for the best price is a priority. For individuals, pharmacy benefits are a cornerstone of their health care, and they need access to their prescriptions at a reasonable price.

In both cases, a PBM solution provider can supply clear, comprehensive information about quality, affordable pharmacy solutions to help ensure the right patient gets the right therapy at the right time.

SM. A PBM simplifies a very complex benefit, somewhat serving as an interpreter. We take the information of a complicated industry and break it down so employers and plan members better understand how issues like drug spend trends, new drug introductions, and generic utilization impact their wallets and bottom lines.

Beyond that, by collecting and analyzing actual prescription claims data, we’re able to help all parties maximize their benefits – be it by monitoring and encouraging member compliance or tailoring solutions for plan sponsors through plan design or clinical programs. Perhaps the greatest benefit a PBM offers is its ability to take all it knows from the industry and combine it with the analysis of a specific group’s claims data to create a benefit plan that performs to everyone’s expectations.

TO. The PBM industry has definitely lost its way when it comes to its primary function, which is to optimize quality of care for the lowest possible cost on behalf of its clients.

Too many conflicts of interest have entered the PBM equation over the years, including payments from drug manufacturers and hidden mark-ups on prescription fulfilment. By avoiding all such conflicts and by focusing strictly on management of cost and quality of care, PBMs like US-Rx Care are able to save 25 percent or more on average for clients on a total cost basis within the first year of service, often with no changes in benefit design.

MC. In addition to a PBMs claim adjudication services, plan sponsors should also expect a PBM to do two things from the start: develop an understanding of what balance of cost and care management the plan is comfortable with, and work with the plan to fully and clearly define its goals.

Individuals, or plan members, should expect high quality customer service. This includes getting a clear explanation of their prescription benefit plan’s options from both the PBMs customer service center and supporting communications.

HRM. How are PBM providers able to offer value for money for their clients?
BN. The foundation for PBM value is a business model of genuine alignment. It’s crucial that PBMs minimize conflicts of interest and that financial incentives reward PBMs when they save money for plan sponsors. Today, where alignment matters most is having the freedom to promote generic alternatives over therapeutically equivalent brands, regardless of brand formulary status. Although alignment sounds conceptual, it has significant practical implications because is shows up in things like how PBMs negotiate their contracts with drug manufacturers.

It’s also important to promote Home Delivery. Plan sponsors often underestimate the value of Home Delivery because of a focus on unit costs. But Home Delivery is a “gateway” behavior, leading to other outcomes that plan sponsors care about: better drug mix, improved therapy adherence, higher dispensing accuracy, and great member satisfaction and engagement. Its true value lies well beyond unit cost savings.

RE. Value for the money is probably the biggest challenge facing PBM providers today. Baby boomers who reach the age of 65 in 2011 can expect to live, on average, at least another 18 years, and this large footprint of the population will need access to more affordable medication. Fortunately, healthcare has never been better than it is today. All development comes at a cost, but PBMs can advance programs that help clients and consumers save money.

One such strategy is to employ generic management programs. At NextRx, we allow customers to try generic drugs for free for up to four months. Customers who chose to switch to generic alternatives after the trial period can see savings of up to $30 per month on their medications. Educational programs are also extremely effective in teaching customers who suffer from chronic conditions about the importance of adhering to their medications to improve their overall well-being.

SM. PBMs offer value in so many ways. Negotiated discounted pricing through retail outlets is one example. There are also the discounts and convenience of home delivery offered by mail order service. We monitor drug data and can make plan design recommendations that promote utilization of the most cost-effective drugs.

The efficiency of our point-of-sale processing helps save clients dollars as it cuts down on administration fees. There’s also the advantage of a PBMs negotiated rebate rates. These are just a few examples.

TO. There is no question that employers and insurers have become highly distrustful of the value obtained from PBMs for the money spent. It’s no wonder, given high annual growth rates in drug benefits expenditures, while PBMs post record earnings year after year.

Despite a growing cry for more transparency from PBMs, most continue to operate under a cloak of secrecy and employers continue to purchase PBM services the same old way –put the blinders on, pay whatever the PBM invoices, switch to a different PBM in a few years and/or raise member deductibles and copayments to make ends meet. The sooner employers and insurers adopt The HR Policy Association’s guidelines for PBM contracting, the better off they will be. If a PBM is not willing to comply, get a new PBM that is.

MC. The value of a prescription benefit plan is best measured with both soft and hard indicators. Soft value is qualitative and demonstrated by personal factors, like members who experience low disruption and high quality customer service, and members who comply with their prescriber’s directions. Hard value is usually measured in dollars and cents, which seem easier to measure; however, the smoke and mirrors surrounding how many PBMs make money actually make it very difficult to quantify hard value.

Instead of being tied to sources that only the PBM can accurately quantify, fixed fee pricing means that a PBMs revenue source is very clearly defined for plan sponsors: it’s the administrative fee spelled out in the service contract. This provides the most value for plan dollars because the PBMs greatest incentive is to manage a plan’s dollars to the lowest net cost, translating to the greatest value per dollar.

MSC. I think many employers have been educated to believe that the value lies in the rebate checks they can receive from pharmaceutical manufacturers. In reality, those rebate checks actually increase their costs. Choosing brand name drugs over generics costs more at the point of sale because it causes drug costs to increase each year.

RxAmerica helps clients understand how drug selections impact their overall costs and then help manage those costs. Some clients opt to add step therapy and prior authorizations, while others choose a cost-saving formulary. Others combine these with additional efforts to control costs and manage trend. The point is that a PBM should always look out for the best interest of the client.

HRM. How important is it that a PBM provider is flexible and able to quickly incorporate new ideas?
SM. Flexibility is critical. The drug landscape is volatile and constantly changing with costs drastically passing the rate of inflation so you need a PBM that can monitor the market and be proactive in adjusting plan designs. There’s also the issue of the client and member diversity. Each group has different needs and a PBM must be willing to customize a plan design that best meets those needs. Blanket solutions with boilerplate plan designs won’t cut it.

TO. PBMs can provide exceptional value to clients by quickly incorporating medical breakthroughs to evolve drug treatment paradigms. A PBM is uniquely well positioned to execute a wide range of real-time disease management interventions designed to improve patient health and lower overall medical costs for clients.

With the cost of healthcare beyond the crisis point, it is fair to say that if health improvement or cost savings are not a given within the first 6 to 12 months of any clinical management program, the buyer should take great caution about paying additional fees for such service. Any program sponsored by drug manufacturers should be researched even more cautiously, since those programs are typically designed to push the manufacturers’ products.

These comments are specific to drug-centric programs only. For programs such as glucose monitoring for diabetics and smoking cessation, the 12-month payback window need not apply.

MC. Each plan’s needs and goals are different, and the pharmaceutical industry is always changing, so a PBMs ability to flexibly support and respond to these factors is fundamental to achieving plan success. Developing and implementing new ideas, however, must be balanced with fiduciary responsibility. At Innoviant, all ideas are put through a rigorous feasibility analysis to compare the end value to development and maintenance cost.

It’s also important for a PBM to have a team of experts who monitor and react to both emerging industry and marketplace issues. When new prescription products become available, a PBM should be ready and able to recommend and implement appropriate National Drug Code (NDC) blocks, establish maximum allowable cost (MAC) pricing, and adjust its individual program offerings. This flexibility enables plan sponsors to realize the greatest value in an ever-changing industry.

MSC. I think flexibility and innovation are key to the success of a partnership. A PBM must be willing to listen to the unique needs of each client and be flexible to meet those needs.

Innovation is vital because our industry evolves so quickly. The market has also been shaped by improvements in disease and utilization management programs, consumer-directed health plans, e-prescribing and transparent contracts, to name a few. The addition of Medicare Part D really made PBMs think in innovative ways to support the new program.

It is important for an employer to find a PBM partner that will offer flexibility with the issues they find most important, and provide solutions for controlling their drug costs. In any partnership, it’s important to know that your partner has your back and is watching out for your best interests rather than theirs.

BN. Flexibility is crucial. We take alignment with our clients seriously, and with a varied clientele, alignment plays out as an ability to flex to a variety of needs. Innovation is also extremely important. A key way Express Scripts is working to incorporate new ideas rapidly is through the Center for Cost-Effective Consumerism. The Center generates hypotheses on the best ways to engage members and effect change in the benefit, analyzes the results of these experiments, and implements successful theories into business practice. It includes an Advisory Board of nationally recognized scholars who provide the scientific insight that guides our work.

RE. The PBM industry is constantly evolving and benefit managers must respond quickly with new solutions. At NextRx we adapt to this evolution to remain flexible when we work with our clients. With science and technology advancing so quickly, payors must constantly re-evaluate cost management and health solutions strategies to help ensure the balance between quality and cost is maintained.

PBM providers must be vigilant about monitoring for and evaluating new ideas from a wealth of sources – including employer group clients, physicians, pharmacists, consultants and even patients themselves. By maintaining an open dialogue with these groups, PBMs can maintain the balance between the triple forces of quality, access and cost. NextRx has a distinct advantage with our access to pharmacy and medical information.

HRM. How has increasingly advanced technology altered the PBM landscape in recent years?
TO. Technology is now readily available to facilitate exchange and warehousing of medical and pharmacy claims by payers and PBMs.

A corresponding bridge between medical and drug benefit designs will be needed to fully leverage the advantages that integrated medical and pharmacy claims databases provide. Specifically, the benefit designs and financial incentives for patients and providers must minimize barriers preventing therapeutic goals from being reached. At the end of the day, all of the medical knowledge and information systems in the world do no good, if economic barriers prevent the desired outcome.

MC. Technology’s greatest contribution to PBMs is the ability to easily access and share information. Innoviant offers customers self-service access to web-based applications they can use to run key management and utilization reports. Members can also access personal information, such as plan design details and claims history, via a similar self-serve portal.

Recently, e-prescribing took center stage as an up-and-coming industry issue. It has the opportunity to improve patient care by replacing handwritten prescriptions with digital orders. Like many new technologies, the uptake of e-prescribing has been varied but, in light of the expected positive impacts, PBMs are working with industry experts to collaborate on solutions.

MSC. Technology has enabled employers and members to take greater control over their prescription benefits. One of the newest trends is the use of e-prescribing.

New reporting tools also allow employers to look at all of the pieces of their drug spend. They can hone in on where the increases are coming from and work with their PBM to manage specific trends. Members are able to access their plan information online so they can view their drug history, order refills for home delivery, see cost benefits and print replacement ID cards. Providing them with this knowledge helps them make more informed choices, benefiting them and their employer.

BN. An obvious change is the automation of Home Delivery, from receipt of prescriptions and prescription management to dispensing, labeling, quality checks, packing, and shipping. These advances led to substantial improvements in accuracy and efficiency in mail-order pharmacies.

Technological advances are also bringing us closer to our members, making us more aware of how they respond to our communications and educational programs. This allows us to tailor letters, calls, and web interactions effectively to drive change in the pharmacy benefit. What we’re seeing is that meaningful communications, ones that resonate with members, are at least as important as plan design in effecting change. In addition, advances in technology are allowing us to rapidly test and learn which messages work in which groups of people.

RE. Technology has revolutionalized the PBM landscape and continues to drive innovation and efficiency within the industry. For example, the advancement of automated dispensing technology has allowed NextRx to make its pharmacies far more accurate, efficient and productive.

Just last fall, WellPoint opened a state-of-the-art specialty pharmacy in Indianapolis, which handles the most complex pharmaceuticals used by our members. These medications are very expensive, but by staffing the facility with certified pharmacy technicians, registered nurses and clinical pharmacists, and automating more than 70 percent of the fulfillment process, we can better manage both the quality and cost of care for our members.

SM. The world wide web has had a tremendous impact on our industry’s landscape. It’s enabled us to better educate and communicate with clients and members so they are empowered to make more informed decisions regarding their prescription benefits. Physicians can access our formulary via their PDA for more efficient prescribing practices. Even the basic tasks of reordering prescriptions and researching drugs can all be done online. We’re more proactive in monitoring compliance and utilization so we’re able to make sure the right patient is on the right medication at the right time.

There are also synergies in software that have led to enhancements in data warehousing, claims processing at point-of-sale, and the ability of PBMs to integrate systems with partners, like disease management firms, to deliver a seamless service continuum. As a result, many of these partnerships have evolved into mergers or acquisitions that have greatly changed the PBM landscape, in particular with negotiating pricing. And now we’re on the cusp of E-prescribing – a technology that will help reduce medication errors and result in greater efficiencies.

HRM. What is it about your PBM offering that makes you stand out in the market?
MC. Innoviant’s success in delivering lowest net cost prescription benefits administration is measurable. In comparison to the national average, Innoviant plan sponsors have repeatedly spent less for their pharmacy benefits – an average of six percent less per year since 1999.

Innoviant offers flexible designs for each unique plan. The goal is to help plans understand and choose the best options for them, and we provide tailored recommendations along the way. In addition, our member service teams include staffing of Certified Pharmacy Technicians to manage first call resolution for even the most complex member service needs. Innoviant provides truth in prescription benefits and warranties information access to validate that our customers pay no more than specified in their contracts.

MSC. RxAmerica provides cost control while being flexible and innovative. I’ve talked a lot about trend management and controlling costs, and we are really experts in this field. While many employers are experiencing increases of 10 percent or more, our clients experience great savings and trend rates around 3.5 percent on average. We believe in listening to our employer partners and being flexible to meet their needs. Our systems allow us to easily make changes to formularies, benefit designs and communication materials.

RxAmerica is innovative when it comes to clinical programs, our specialty offering and our ability to provide a guaranteed per member, per month fee for our clients and we are committed to finding new ways to add value to the experience of our partners.

BN. Express Scripts is taking our business model of alignment to the next level with an advanced, multidisciplinary understanding of consumer behavior in the pharmacy benefit. To date, PBMs have depended on recommending financial incentives like tiered copayments to motivate behavior change. But this reliance on rational economics is costing corporate America and working Americans $20 billion per year in under use of generic medications alone. The number is probably twice as large for the country as a whole. Express Scripts is unlocking this value is by applying findings from behavioral economics, social psychology, cognitive neuroscience and other areas to enhance member communications. In addition, we’re tailoring our messaging to consumer subgroups, and using the best scientific methods, such as randomized controlled trials, to understand what works when it comes to effecting positive change at the consumer level.

RE. NextRx is the largest health-plan owned PBM and the fourth largest PBM in the country which signifies our ability to service customers from an integrated or stand-alone approach exceptionally well. Our unique use of medical and pharmacy information and advances in technology are difficult to imitate. Our ability to identify how medication use impacts the overall health delivery system is one of our greatest assets. This detailed understanding of the interplay between the two benefits is vital to companies to stay ahead of the rising trend in health care costs.

Our outcomes-based formulary considers efficacy and quality before cost, rather than better pharmacy outcomes alone. We promote therapeutic switches from high-cost brand-name pharmaceuticals to low-cost generic alternatives. That saves our customers significant out-of-pocket expenses while still providing them with equivalent therapies. Using our vast data library, we measure the effect that every pharmacy decision has on real-life outcomes on the medical side. This total health care picture approach truly sets NextRx apart.

SM. Plain and simple, we make life easier for our clients and members. We take the guesswork out of important decision-making by providing facts and information, along with an expert interpretation of both. It’s the latter point that really differentiates us. I’m always surprised at how many new clients say they switched to us because of how proactive we are in explaining how industry events or findings impact their group directly. In fact, we’re proactive in all we do.

We also give members the tools to be proactive themselves via our web site, where they can trial adjudicate claims to compare prescription costs themselves. Plus, clients appreciate that we take the initiative to analyze their claims data when crafting their plan design. “Crafting” because that’s really what we do. We customize a benefit package for each client’s unique needs. And we customize beyond plan design. We also customize provider networks, reports even clinical programs. That’s why we call ourselves ‘The Hand-crafted PBM.’

TO. US-Rx Care’s approach represents a significant departure from methods and practices typically employed in the PBM industry. Typical client savings range from 25 to 45 percent in total drug and administrative cost versus their previous service provider within the first 12 months service. Out-of-pocket cost reductions for covered members often exceed 30 percent a year as well. Further cost reductions are typical in years two and beyond.

At US-Rx Care, we leverage three primary tools for cost containment: we add no mark-up on prescriptions filled for covered members and 100 percent of our receipts from drug manufacturers are passed through to clients; we operate efficiently by using one of the most sophisticated and flexible, high-capacity pharmacy benefit management systems in the industry; and implement proprietary therapeutic optimization programs that consistently deliver double digit cost savings for clients year after year. US-Rx Care offers exactly the type of transparent, trustworthy and cost saving benefit management service so desperately needed by every benefit sponsor today.

Mark SantaCroce is Chief Marketing Officer Rx America and is responsible for leading the company’s marketing, account management and sales initiatives. SantacCroce has over 16 years of experience leading health plans and pharmacy benefit managers. He has also served as Chairman of the Board of the North Carolina Association of Health Plans, on the North Carolina Health Insurance Innovations Commission and with various task forces and alliances.

Renwyck Elder is President of WellPoint NextRx, and a SVP of WellPoint, Inc. WellPoint NextRx is the full-service pharmacy benefit manager owned and operated by WellPoint, Inc. Elder manages all functions and operations, including clinical and network management, mail pharmacy operations, disease management, sales and account management.

Sharon Murillo is President of Serve You – Custom Prescription Management, Inc., based in Milwaukee, Wisconsin. Murillo has more than 20 years of PBM experience, the last 10 spent at Serve You. Prior to Serve You, she worked for a PBM software developer, as an independent consultant focused on evaluation of PBM systems and operations, and for a national managed health care company, where she played a central role in developing their PBM product offering.

Taeho Oh, RPh, Chief Pharmacy Officer, US-Rx Care Throughout his career, Oh has managed pharmacy operations within hospital systems, physician group practice organizations, health insurance companies, home infusion companies, university health systems, and in pharmacy benefit management. Oh has taught at the College of Pharmacy level and also provides continuing education programs for pharmacists, physicians, and other health care professionals.

Dr. Mark Campbell, is President and CEO of Innoviant Inc. The company is a Prescription Benefits Administrator and business unit of UnitedHealth Group. Dr. Campbell earned his Doctor of Pharmacy degree from the University of Tennessee College of Pharmacy and attended the Wharton Business School Executive Management Program for Pharmacy Leadership.

Bob Nease is chief scientist and VP of Marketing at Express Scripts. He works to advance the understanding of consumer behavior at the PBM, closely following emerging science around human behavior, translating findings to testable hypotheses, and developing tools to help clients enable better health and value in the pharmacy benefit.