Employers pay more than 80% of commercial (non-Medicare/Medicaid) health care costs, but their experience with traditional volume-based pharmacy benefit arrangements often fails them. Their pharmacy costs have gone up, but their population is not healthy. They got kickbacks, but they didn’t save money.
The PBM industry — a transaction-driven industry that emphasizes economic allocation and relies entirely on prices, rebates, and discounts — has consistently disappointed employers and patients with a model similar to retail. This is where the problem lies. Healthcare is fundamentally different from retail. There should be no differences in access to pharmacies and patients should receive care that is right for them. Volume-based models driven by “sophisticated” drug pricing models cannot improve employee health or reduce employer costs. At the end of the day, PBM is profitable regardless of the outcome.
25% of health care spending is wasted, 40% of Americans have comorbidities and take multiple medications, and 22% of U.S. adults ages 40 to 69 take 5 or more medications. It is clear that current approaches to care management are not working. solution? PBM must bring value to the healthcare discussion.
For a long time, PBMs had nothing to offer other than alternative pricing models that diverted the conversation of interests away from healthcare. Healthcare is the only business that is not judged by value, but value is the only measure of healthcare efficacy. A truly consistent and value-driven model is one where employer outcomes are directly related to benefit provider earnings.
Underserved Populations, Health Equity, and Population Health Management
A small subset of patients have significantly higher healthcare complexity and require more care and attention. We hear healthcare economists talk about this many times. According to a 2021 report released by the Kaiser Family Foundation (KFF), 5% of Americans spend 49% of all health care spending. That’s just spending numbers. Thirty-four percent of the same cohort described themselves as having average or poor health. Even at EmpiRx Health where I work, 2.6% of our patients consume about 45% of our services. Patients with medical complexity have a disproportionate range of health care needs and are disoriented when they need us most.
While most PBMs continue to focus on driving the drug pricing conversation, care management in the industry is still antiquated, condition-driven, and organized around rebates and the bottom line of PBMs. Relying on the strengths of digital thinking, PBM continues to add clinical programs for more situations, while refusing to do anything different around the health of client groups and their patients with complex care needs. Employers are also accustomed to accepting that PBM is offering more clinical programs, so it must do its job well. When this happens, the underserved find themselves on the island more than ever. The perfect recipe for healthcare inequality.
For more than 25 years, the fundamental challenge of care management in the PBM industry has been its conditional orientation, and this approach has clearly not worked. Narrowing the focus to one major disease fails to address key underlying social, behavioral, and physical complications that significantly increase clinical and financial risk. Optimal care models require a tailored approach to population health management that takes into account both the employer’s overall risk profile and a longitudinal analysis of each patient in that population. By adopting this approach to population health management, PBMs have a unique opportunity to fill the care gap created by treating only the most important diseases, as they can provide a missing 360-degree view of the patient. With value-based and pay-for-performance models, active health management pays off and there is no incentive to increase drug volumes. PBM is only used to achieve defined clinical and financial metrics.
This shift in focus makes a huge difference. It gives PBMs a reason to invest in technology and workflows to proactively care for patients’ overall health, not just their major ailments. Pharmacists become active members of the patient care team interacting with PCPs and other providers. Optimize clinically appropriate treatment plans based on population health data and insights. By looking at the entire patient, PBM can optimize utilization and improve outcomes, all while reducing costs.
For example, two patients diagnosed with chronic migraine were prescribed the same high-cost injectable brand-name drug. In a traditional volume-based model, those prescriptions would be rubber-stamped by PBM, or moved to branded prescription alternatives—whichever yields the highest rebates for PBM. Since clinical and financial outcomes are the drivers of a value-based approach, employers should expect a more in-depth look at the Rx of high-cost injectable drugs from PBMs. If PBMs reviewed patient data and discussed these cases with prescribers, they may have found:
- Patient A has experienced several doctor and emergency room visits, daily migraine headaches, and trial and failure of preventive and rescue medications. Patient A’s condition meets clinical guidelines for prescribing an injectable brand-name drug and therefore requires it. In this case, prescription drugs are prescribed and dispensed appropriately.
- Patient B was newly diagnosed and had not been previously treated for migraine. Pharmacists at PBM recommended an oral preventive drug as a lower-cost generic drug that prescribers felt was a more clinically appropriate option.
Both patients received care that was right for them, so employers saved thousands of dollars in drug bills.
in conclusion
The output of a well-executed population health management strategy can pay significant dividends in the pharmacy benefit space, and results can be ultimately measured and monitored. This approach to population health also aligns with the core philosophy of value-based healthcare, which is doing the right thing in a consistent manner across all relevant stakeholders.
Employers are being persuaded to forgo healthcare and innovative care models for their employees in favor of using the traditional PBM of their choice for retail-like purchasing conversations. By eliminating condition-based care management and leveraging a value-based pay-for-performance model, the PBM industry can deliver better care, significantly improve access, and reduce costs. Only then can employers see real value.
Photo: Devrimb, Getty Images
