Pharmacy Benefit Managers (PBMs)

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 • PBMs-are private companies hired by employers and health plans to help administer drug benefits

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

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

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

6. Most Dominant PBMs • Caremark, Inc. (merged with Advance PCS)-90 million covered lives • Medco Health Solutions, Inc.-60 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 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 • PBMs are not wholesalers and do not generally purchase and sell RX drugs • But, many PBMs own a mail order pharmacy

9. Problems with PBMs • 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 • 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 • Pharmacy spread-the difference between the price charged health plans and the price paid pharmacies • Mail-order pharmacy

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

12. Pharmacists Role Goals • Increase quality of care to members • Promote appropriate drug therapy • Enhances medication compliance • Improves preferred drug compliance • 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? • Are there any other payments a PBM gets from drug manufacturers besides rebates? • How often a PBM changes their formulary?

14. More questions to ask • How are co-payments set? • Ask for detailed disclosure and explanation of a PBMs fee schedule • 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 : ● Eligible member list ● Benefit plan information ●Notification requirements ● Provision of Eligibility Info ● Business development

16. In Summary • 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 • Keep in mind that PBMs are a for-profit business • Not always looking out for the best interest of the client or patient