Pharmacy Benefit Managers (PBMs)

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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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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

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PBMs function

• Purchase and dispense medications
• Pay claims
• Financial intermediary between pharmacies and
  plan sponsor
• Manage prescribing choices
• Maintain pharmacy networks

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PBMs 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

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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

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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

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Focus of PBMs

• Negotiate the customers ultimate cost
• a) reimbursement to retail pharmacy
• b)payment to manufacturer of the drug
• Establish network of participating pharmacies
• Negotiate rebates with drug manufacturers

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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

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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

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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

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Pharmacists Role in PBMs

• 3 Clinical Interventions
• A)Therapeutic Interchange
• B)Medication Adherence
• C)Therapy Management

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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

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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?

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More questions to ask

• How are co-payments set?
• Ask for detailed disclosure and explanation of a
  PBMs fee schedule
• What is PBMs policy on selling pharmacy data?

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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

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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