When nonprofit health insurer Blue Shield of California announced in August that it was making a significant change in how it administers pharmacy benefits for its 4.8 million members, the health insurance industry took notice, as did the financial markets. CVS Health, the parent. The insurer’s outpatient pharmacy benefit manager (PBM) company saw its stock drop 8 percent the day Blue Shield announced its decision.
The Oakland-based insurer’s new model, called Pharmacy Care Reimagined, includes new relationships with four entities in addition to the CVS PBM known as CVS Caremark. When announcing the new model, Blue Shield said:
- Amazon Pharmacy will “provide fast and free delivery of prescription drugs, complete with status updates, upfront pricing and 24/7 access to pharmacists.”
- Mark Cuban Cost Plus Drug Company will “create a simple, transparent and more affordable pricing model, reducing surprise drug costs from over the counter pharmacies.”
- Abarca will “quickly and accurately pay prescription drug claims while continuing to develop its Darwin technology platform to support new, simplified payment models.”
- Prime Therapeutics “will work with Blue Shield to negotiate savings with drug manufacturers to move toward a value-based model that aligns drug prices with patient efficacy and health outcomes.”
- CVS Caremark will “provide specialty pharmacy services, including education and high-touch patient support for members with complex conditions.”
Blue Shield says the new approach could save the company up to $500 million a year when it’s fully up and running, or a little more than $100 a year per member. With 2024 open enrollment underway at many employers, Tim Lieb, Blue Shield’s senior vice president of growth, said other benefit managers interested in how the plan will play out should be patient.
“Because it goes into 2024, you won’t see material changes from our plan yet,” Lieb said. “It’s really happening in 2025.”
But whether the new Blue Shield model is the first of a wave of new PBM arrangements that HR leaders can and should follow to design their own benefits or just an approach with limited applicability is still up for debate.
“It will be interesting to see how this plays out in terms of the member experience, with so many different benefit components being outsourced when they are typically simplified,” said Kathy Asch, senior director of health and benefits at consulting firm WTW. “Disconnecting that can not only be difficult for members to navigate who to go to for what, it can also be a difficult administrative experience, especially for HR teams that are already thinly staffed.”
Asch had this observation for anyone thinking of imitating Blue Shield: “It is important to assess the impact of an interim intervention on overall plan costs. On the surface, taking out some components may seem like savings. However, in some cases, when all components are added up individually, these expected savings can translate into costs, both in literal dollar terms and figuratively, in additional administrative and member experience burdens.
Market decentralization and the fight against specialty drugs
Matthew Fiedler, a senior fellow at the Brookings Institution’s Brookings Schaeffer Initiative Health Policy, said Blue Shield’s new relationship could be the front of the carriers’ attempts to erode the market power of the three largest PBMs (Express Scripts, CVS Caremark and Optum Rx). , which together control more than 75 percent of the prescription drug market nationwide.
“There are ways in which this is part of a broader trend,” Fiedler said. “It’s a fairly recent development that the big PBMs are all part of a big insurance company. I think over time we’ll probably evolve to where at least the larger insurers mostly rely on in-house or somehow affiliated PBMs. the market structure we have right now — the big three PBMs dominating the market — is probably not what we’re going to be with in the long term.”
In fact, Blue Shield’s announcement may be a pioneering indicator of Fiedler’s observation. In January 2020, the Blue Cross Blue Shield Association and 18 independent BCBS companies were formed CivicaScript, a public for-profit company that coordinates the production and distribution of widely used but expensive generic drugs. CivicaScript has created a generic version of the prostate cancer drug abirterone called Zytiga that is about 95 percent lower than average. For the Zytiga brand. CivicaScript says Medicare patients pay an average of $3,200 per month Zitiga, and it recommends that pharmacies charge no more than $171 for its version. In January 2023, Blue Shield of California was the first health plan to make generic abiraterone available to members.
In the area with the greatest growth in drug spending, specialty pharmaceuticals, several BCBS insurers have joined together to form their own PBM, the Synergie Drug Pool, to cover drugs administered in the clinical setting. Synergie’s approach may also be indicative of how pharmacy benefits and medical benefits administration should become more holistic.
“The drugs covered by the medical benefit are often expensive treatments, such as multimillion-dollar gene therapies and infusional cancer drugs,” according to Synergie’s website (the group did not return requests for comment). “These treatments represent a significant portion of total drug costs, with significant future cost increases expected.” Specialty drugs accounted for 55 percent of net drug spending as of March 2022, with an annual growth rate of 11.7 percent in January 2023, compared with 7.3 percent for traditional, according to an analysis by healthcare IT firm IQVIA. drugs.
Better alignment and management of combined pharmacy and medical benefits can reap savings overall for specialty drugs, as well as those treating chronic conditions over traditional pharmaceuticals, Fiedler said.
“It’s clear that the shift to greater insurer-PBM integration will create somewhat better incentives for chronic disease drug coverage,” he said. “If you get better coverage for prescription drugs and reap the savings for conditions that are better managed, that can lead to stronger drug coverage.
“In most cases, it was still the same entity that was always on hand, meaning the self-insured employer was always on hand for both drugs and medical expenses, but having those things under one roof can help in some cases. cases make it easier to coordinate drug and medical benefits,” Fiedler explained.
Indeed, such coordination is exactly what Blue Shield hopes to achieve, according to the company. Pharmacy Care Reimagined’s goals are to reduce costs for all prescription drugs covered by both pharmacy and medical benefits to achieve a holistic pharmacy care experience.
Versus actual savings estimation
Proving the opposite – a statement that presents a solution to a situation different from reality – is a widely recognized logical fallacy. However, recently developed drugs may soon prompt benefits managers and their carrier partners to take a closer look at how more closely coordinating pharmaceutical and medical benefits, including off-label drug use, can save overall health care costs that could otherwise be performed. had a chronic condition that was not treated with a prescription.
For example, a study published in August New England Journal of Medicine The website found that the drug semaglutide, used to treat obesity under the brand name Wegovy and type 2 diabetes as Ozempic, significantly reduced symptoms of a type of heart failure called preserved ejection fraction in people classified as obese. in which the researchers noted. no approved treatment yet exists.
An independent study by the American Enterprise Institute on a wide variety of net drug pricing and list pricing also found vastly different costs for users depending on their insurance status; For drugs covered by insurance, patients covered who also had a manufacturer’s receipt spent the assumed net. price (manufacturer price) was $290 per month for Ozempic and $701 for Wegovy, while the estimated costs for insured patients who were not covered for the drugs were $936 for Ozempic and $849 for Wegovy :
The results for these drugs in off-label indications, such as heart failure, raise many questions about how to calculate how much such treatment could save on overall costs, which could lead to lower premiums (the Centers for Disease Control and Prevention estimates those with diabetes: $19,700 in medical costs per year). But benefits managers also need to calculate an upper limit on an employee’s ability to absorb out-of-pocket costs.
“People want low premiums and low costs, and those things can’t necessarily go together,” Fiedler said. “There are reasonable arguments that many plans include more cost-sharing than they should, but that’s because employers are trying to keep premiums low for their own sake, but also for the portion they pass on to employees. In terms of making some of these choices. more transparent, there are things employers can do to better represent the benefit design of alternative plans. But honestly, a lot of effort has been put into it in a lot of domains, and I think the takeaway messages are in a lot of ways. rather discouraging, for example, designing a benefits plan is just inevitably complicated.”
But as new entities like CivicaScript and Synergie grow, Fiedler and Asch say benefits managers must balance pushing their vendors to provide back-office cuts like CivicaScript’s abirterone. by finding ways to make consumer choice easier to understand. And it will likely be hard work.
“People don’t just need to understand the plan, they can also predict what they might need during the year and add those things together to figure out what their costs will be,” Fiedler said. “It is not an easy thing to do.”
However, Asch said such tools are becoming a widely sought-after item, and should be.
“Tools and technology for members and prescribers to make more informed choices about which treatments and pharmacies are most cost-effective based on their specific plan design are key resources,” he said. “Some vendors have made significant investments in this area, while others still have a ways to go. Almost everyone is looking for the easy button, so it strikes the right balance between sharing the best personalized recommendations and actually making it easy for them to choose, e.g. , “We’ll contact your doctor to make the change,” is the next level of service our customers are looking for.”
Blue Shield’s Lieb said it’s important to adopt an attitude of iterative improvement.
“Don’t let the perfect get in the way of the good,” he said. “If there’s anything we’ve learned from the tech industry, it’s that versions 2.0 and 3.0 can be. You can develop it. We would never have done Pharmacy Reimagined if we said it had to be perfect. Watch it as it should continue to evolve and continue to improve. It’s the same way that professionals have to think about what they’re offering.”
Greg Gott is a health and technology freelance writer based in Oakville, Conn.
#PBMs #evolving #Heres
Image Source : www.shrm.org