PHAR 746 Pharmacy Management

1. PHAR 746Pharmacy Management Stacy Ramirez, Pharm.D. Clinical Assistant Professor Department of Pharmacy Practice

2. Third Party • Discuss the history of insurance • Understand the role of third party payers in pharmacy • Examine third party contracting • Identify the role of PBMs

3. $10.50 20% $2.00 $1,000,000 $12.21

4. Third Party History • 1929 • Private Group Health Insurance • Teachers in Dallas, TX • 1932 • Blue Cross/Blue Shield • Non-profit • Group health plans

5. Third Party-History • 1939-1945 • Wartime wage freezes • Increase in group plans from employers • 1954 • Disability benefits included in Social Security • 1950’s • Growth of Private Health Insurance

6. Third Party-History • 1965 • Medicare/Medicaid • Implemented in 1966 • 1980’s and 1990’s • Growth of managed care, HMOs • 2006 • Medicare Part D

9. Third Party-History • Euphemisms • Consumer-driven • We pay most of the cost • Consumer Choice • Only if you can afford it • Consumer Responsibility • You’re on your own • Defined Contribution • Employers pay what they want

10. Third Party • Third party prescriptions account for up to 97% of all prescriptions filled • Up significantly with Medicare Part D • Cash patients account for the balance Cash Third Party

11. Third Party • Public • Medicare • Medicaid • Private • Insurance companies • Drug Manufacturers

12. Third Party-Public • Medicare • Part D • Available to older Americans • Also disabled after 24 months

13. Third Party-Public • Medicare • Challenges include: • Rocky start-up • Confusing enrollment • Conversion from cash patients • Slow payment

14. Third Party-Public • Medicaid • State and Federally funded • Assistance for low income people • Better than average reimbursement rates

15. Third Party-Public • Challenges • Complex processes • Formulary process • Inadequate access??

16. Third Party-Private • Insurance Companies • Traditional Indemnity • HMO • Capitation • Pharmacy Networks

17. Third Party-Private • Challenges • Falling reimbursement rates • Complex processes • Negotiating power Reimbursement Rates

18. Third Party-Private • Drug Manufacturers • Patient Assistance Programs • 200% below poverty level • Varying other requirements • All have some type of program

19. Third Party-Contracting • Price • AWP • MAC • AMP • Dispensing fee

20. Third Party-Contracting • Volume • Covered lives • % of scripts filled • Growth potential • Marketing support

21. Third Party-Contracting • Network • Exclusivity • Member choice

22. Third Party-Contracting • Incentives • Exclusivity • Generic goals • Market share • Professional services

23. Third Party-PBM • Pharmacy Benefit Manager • Caremark • Medimpact • Prescription Solutions • Administer drug benefit programs • Employers • Insurance carriers

24. Third Party-PBM • PBM Stats • 95% of rxs processed through PBM • 70% of 3 billion rxs paid through PBM • 19% of scripts filled at mail-order owned by PBM • Manage benefits for 65% of seniors

25. Third Party-PBM • PBM contract with: • Insurance companies • Managed care organizations • Self-insured employers • Unions • Medicaid and Medicare managed care plans • Government entities

26. Third Party-PBM • Functions of PBMs include • Claims processing • Formulary management • Drug utilization review • Educations • MTM • Specialty drugs

27. Third Party-PBM • Formulary Management • Relative clinical Value • Net cost • Market share • Discounts or rebates • Possible patent expiration