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Pharmacy Benefit Managers (PBMs) Dimitry Gotlinsky Western University Managed Care Clerkship ProPharma Pharmaceuticals Consultants, Inc. 5/2/2006.

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Presentation on theme: "Pharmacy Benefit Managers (PBMs) Dimitry Gotlinsky Western University Managed Care Clerkship ProPharma Pharmaceuticals Consultants, Inc. 5/2/2006."— Presentation transcript:

1 Pharmacy Benefit Managers (PBMs) Dimitry Gotlinsky Western University Managed Care Clerkship ProPharma Pharmaceuticals Consultants, Inc. 5/2/2006

2 What are PBMs? Rising health care costs have forced employers and health plans to develop methods to manage costs Rising health care costs have forced employers and health plans to develop methods to manage costs PBMs-are private companies hired by employers and health plans to help administer drug benefits PBMs-are private companies hired by employers and health plans to help administer drug benefits

3 PBM’s function Purchase and dispense medications Purchase and dispense medications Pay claims Pay claims Financial intermediary between pharmacies and plan sponsor Financial intermediary between pharmacies and plan sponsor Manage prescribing choices Manage prescribing choices Maintain pharmacy networks Maintain pharmacy networks

4 PBM’s added services Real-time medication check Real-time medication check PBMs conduct electronic clinical reviews before medications are dispensed PBMs conduct electronic clinical reviews before medications are dispensed Prescription is checked for: Prescription is checked for: ●Drug-drug interaction ●Drug-drug interaction ●Drug-age interaction ●Drug-age interaction ●Appropriate dosage ●Appropriate dosage ●Excessive utilization ●Excessive utilization ■ Pharmacists at point-of-sale receives a real time alert

5 Why is there a rise in PBMs 3 main reasons: 3 main reasons: 1)Number of RXs per person increases 1)Number of RXs per person increases 2)Newer, higher costs RXs are replacing older, less costly medications 2)Newer, higher costs RXs are replacing older, less costly medications 3)The prices of RX drugs are increasing 3)The prices of RX drugs are increasing

6 Most Dominant PBMs Caremark, Inc. (merged with Advance PCS)-90 million covered lives Caremark, Inc. (merged with Advance PCS)-90 million covered lives Medco Health Solutions, Inc.-60 million covered lives Medco Health Solutions, Inc.-60 million covered lives Express Scripts, Inc-40 million covered lives Express Scripts, Inc-40 million covered lives

7 Focus of PBMs ■ Negotiate the customer’s ultimate cost a) reimbursement to retail pharmacy a) reimbursement to retail pharmacy b)payment to manufacturer of the drug b)payment to manufacturer of the drug ■ Establish network of participating pharmacies ■ Negotiate rebates with drug manufacturers

8 Who is in charge? Ultimately, the health plan is in charge Ultimately, the health plan is in charge PBMs are not wholesalers and do not generally purchase and sell RX drugs PBMs are not wholesalers and do not generally purchase and sell RX drugs But, many PBMs own a mail order pharmacy But, many PBMs own a mail order pharmacy

9 Problems with PBMs PBMs are paid for services which are not considered rebates PBMs are paid for services which are not considered rebates Use of call centers to actively encourage doctors to switch individual patients to preferred drug Use of call centers to actively encourage doctors to switch individual patients to preferred drug Refusal to disclose information on the prices they pay for drugs, as well as the rebates amounts Refusal to disclose information on the prices they pay for drugs, as well as the rebates amounts

10 Problems with PBMs continued Collection and sale of PBM data on patients Collection and sale of PBM data on patients Pharmacy spread- the difference between the price charged health plans and the price paid pharmacies Pharmacy spread- the difference between the price charged health plans and the price paid pharmacies Mail-order pharmacy Mail-order pharmacy

11 Pharmacist’s Role in PBMs 3 Clinical Interventions 3 Clinical Interventions A)Therapeutic Interchange A)Therapeutic Interchange B)Medication Adherence B)Medication Adherence C)Therapy Management C)Therapy Management

12 Pharmacists Role Goals Increase quality of care to members Increase quality of care to members Promote appropriate drug therapy Promote appropriate drug therapy Enhances medication compliance Enhances medication compliance Improves preferred drug compliance Improves preferred drug compliance Increases utilization of cost-effective pharmaceuticals Increases utilization of cost-effective pharmaceuticals

13 Things to ask for when selecting a PBM Does the PBM uses the same AWP in calculating price to clients and payments to pharmacies? Does the PBM uses the same AWP in calculating price to clients and payments to pharmacies? Are there any other payments a PBM gets from drug manufacturers besides rebates? Are there any other payments a PBM gets from drug manufacturers besides rebates? How often a PBM changes their formulary? How often a PBM changes their formulary?

14 More questions to ask How are co-payments set? How are co-payments set? Ask for detailed disclosure and explanation of a PBMs fee schedule Ask for detailed disclosure and explanation of a PBMs fee schedule What is PBM’s policy on selling pharmacy data? What is PBM’s policy on selling pharmacy data?

15 Duties to be performed by the client in the contract Must provide a PBM with : Must provide a PBM with : ● Eligible member list ● Eligible member list ● Benefit plan information ● Benefit plan information ●Notification requirements ●Notification requirements ● Provision of Eligibility Info ● Provision of Eligibility Info ● Business development ● Business development

16 In Summary PBMs manage the majority of prescriptions that flow through health care system PBMs manage the majority of prescriptions that flow through health care system PBM industry has evolved from small claims processing firms to more concentrated industry with comprehensive service offerings PBM industry has evolved from small claims processing firms to more concentrated industry with comprehensive service offerings Keep in mind that PBMs are a for-profit business Keep in mind that PBMs are a for-profit business Not always looking out for the best interest of the client or patient Not always looking out for the best interest of the client or patient


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