In the current debate over health care, employers, unions, and government programs all agree on the need to provide prescription drug coverage at lower costs while increasing the quality and clinical value of pharmacy benefits.
That’s why the companies and public programs providing prescription drug coverage hire pharmacy benefit managers, or PBMs. Through their expertise and market scale, PBMs are able to reduce drug costs by negotiating rebates and discounts from big drug companies and drugstores. It would be too expensive and complicated for employers, or other payers, to match PBMs’ ability to reduce drug costs, while providing access.
Though drugmakers continue to raise prices out of proportion to increases in value, PBMs are doing their job by keeping drug costs down. A recent report by QuintilesIMS Institute showed that discounts, rebates, and other price concessions on brand-name drugs reduced overall drug spending by an estimated 28 percent in 2016. The report also shows that net price growth – the price payers actually pay – for prescription drugs is likely to remain in the 0-3 percent range, largely because of the work of payers and PBMs.
Having been involved as a clinician representing insurers and PBMs for more than 25 years, I know firsthand the importance of leveraging savings while ensuring that patients have the medications they need.
One patient-friendly cost savings option that PBMs provide to consumers is home delivery of chronic medications. As more and more people move to a “home-delivery economy” for many of their needs, mail-service pharmacies are a natural extension that adds convenience and lowers costs. By using home delivery, consumers can avoid multiple (and unnecessary) trips to the drugstore while receiving private counseling from trained pharmacists seven days a week, 24-hours a day.
Mail-service pharmacies feature cutting-edge technology that can track and improve patients’ adherence to prescribed medications. Research shows that better adherence to prescribed drug regimens means that patients won’t need as many trips to the doctor or hospital, lowering overall health care costs for everyone.
It’s easy to see that PBMs reduce drug costs, but often overlooked is the clinical value that they provide payers and patients. PBMs work in coordination with their clients in carefully evaluating new drugs, review existing drugs, and apply sophisticated drug assessments that promote the best use of complex medications, and the appropriate use of mainstay drugs.
Pharmacists, doctors and other professionals employed by PBMs review the medical evidence for every drug approved by the FDA and assist in managing drug-related side effects and provide support so that patients stay on their drug regimens and out of the hospital. That, in turn, lowers costs for patients and the entire health care system.
These formularies organize medications according to their therapeutic effects and create logical sequences for their use based on clinical effectiveness, place in therapy according to national guidelines, and safety. Generic and lower cost brand medications can be incentivized before more expensive medicines because they work well for the majority of patients and have lower copays.
Lastly, as the health care sector moves toward payment for value rather than volume, PBMs are providing expertise in developing and executing on these types of contracts that are intended to ensure that our pharmaceutical dollars are spent on drugs that provide the best outcomes.
These agreements require a high level of sophistication about drug use patterns and patient outcomes, as well as the ability to monitor and improve patient compliance and measure relevant outcomes.
As the public debate continues to unfold on health care, PBMs are part of the solution that lowers drug costs and improve quality.
Ed Pezalla, M.D., MPH, is a leading innovator and consultant on payer strategy for pharmaceutical and device manufacturers, and is currently a Scholar-in-Residence at the Duke-Margolis Center for Health Policy in Washington.