Pharmacy 101 Program

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Pharmacy 101 Program
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Pharmacy 101 - Unit One PBM Overview

• PBM Overview
• This presentation provides a general overview of
  Pharmacy Benefit Managers (PBM).
• Besides covering the basics, the presentation
  also introduces Prime Therapeutics and
• describes some of its services.
• Objectives
• After completing PBM Overview you should be able
  to
• Describe the basic features of a PBM
• Explain Primes and BCBSILs roles in
  decision-making and administration
• Describe BCBSILs report utility

Disclaimer All individually identifiable health
information contained within this lesson is
fictitious and should be kept highly
confidential. Any association to any person,
living or dead, is purely coincidental. The
information contained within this lesson is not
for use/disclosure outside of Health Care Service
Corporation and its affiliated companies.
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Pharmacy 101 - Unit One PBM Overview
Introduction
Part 1 What is a PBM?
Welcome to PBM Overview! The presentation
covers several key pharmacy topics including
Pharmacy Programs, Benefit Design and Marketplace
Trends. While each section touches upon many
different topics, they are not an exhaustive
description of our pharmacy programs. Instead
they provide you with key information and tools
to help you work with clients.
Part 2 What a PBM does
Unit 3 Cost Savings
Unit 4 Introducing Prime Therapeutics
Unit 5 Reporting
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Pharmacy 101 - Unit One PBM Overview
Part 1 What is a PBM?
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Pharmacy 101 - Unit One PBM Overview
Part 1 What is a PBM?
Price inflation
More direct-to-consumer advertising of drugs
Expanded use of prescription drugs
Over the past two decades, the health care
industry has seen a steady increase in
prescription drug spending. In fact, spending on
prescriptions has increased at a faster rate than
overall health care spending. Why is this? There
are several key factors in play.
An aging population which means more users and
more prescriptions per user
New drugs
Drug therapies have replaced some inpatient care
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Pharmacy 101 - Unit One PBM Overview
Part 1 What is a PBM?
Many employers and insurance plans have tackled
these challenges by enlisting pharmacy benefit
managers (PBM) to help them better manage claims
administration and cut costs. PBMs come in all
shapes and sizes. Their clients may be insurance
companies, retail drugstores, employers, unions,
Medicare and Medicaid. Some are subsidiaries of
insurance plans or retail drugstores, while
others are independently owned. PBMs also vary in
what they do. Their role has evolved from a
third party claims processor to a complex
administrator, negotiator and advisor. Their
primary responsibility is to process and pay
prescription drug claims. In addition, theyre
also responsible for managing the formulary,
creating client programs, negotiating discounts
with retail pharmacies and contracting with
pharmaceutical manufacturers for rebates. Many
also offer disease management, drug utilization
review, mail-order pharmacy and network
management.
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Pharmacy 101 - Unit One PBM Overview
Part 1 What is a PBM?
Tier I PBMs CVS-Caremark 99 Medco
Health 65 Express Scripts 55

• There are over 50 PBMs in the marketplace. This
  chart shows the most established PBMs, divided
  into tiers.
• Tier 1 accounts for about 43 of the covered
  lives.
• Tier 2 accounts for 45.
• Tier 3 accounts for 11.
• New entrants account for 1.

Tier II PBMs Wellpoint (NextRx) 24 Prime
Therapeutics 12 Prescription Solutions
12 Aetna 11 MedImpact 10 Cigna 9 Walgreens
Health 5
Tier III PBMs MIM (BioScript) 5 Serve-You 4 NMHC
3 RESTAT 2
The figure next to each company represents the
number of members in millions.
New Entrants CatalystRx 4 HealthTrans 2 Innoviant
2 EnvisionRx 1
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Pharmacy 101 - Unit One PBM Overview
Part 2 What a PBM does
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Pharmacy 101 - Unit One PBM Overview
Part 2 What a PBM does
The following topics provide a general overview
of the most common services PBMs offer.
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Pharmacy 101 - Unit One PBM Overview
Part 2 What a PBM does
Claims Administration and Benefit Management PBMs
undertake the daunting task of managing thousands
of benefit claims. Fortunately, PBMs process
nearly all claims electronically, in real-time.
This eliminates paper claims and reduces the need
for claims adjudication. When a member fills a
prescription, the pharmacist can instantly verify
through the PBM, the members eligibility, drug
coverage, the members copay or coinsurance and
the cost to the insurer. Copays and coinsurance
are examples of cost-sharing. The client
determines how much of a drugs cost must be
shared by the member. Cost-sharing may take the
form of copays, coinsurance, deductibles or
out-of-pocket limits. One feature of cost-sharing
is a tier-system of payment, which well discuss
later.
Claims Administration and Benefit Management
Pharmacy Network
Formulary
Rebates and Discounts
Drug Utilization Review
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Pharmacy 101 - Unit One PBM Overview
Part 2 What a PBM does
The chart below outlines some of the strengths
and limitations of a coinsurance program vs. a
copay program.
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Pharmacy 101 - Unit One PBM Overview
Part 2 What a PBM does

• Pharmacy Network Management
• PBMs also set up and manage pharmacy networks.
  Most large PBMs establish nationwide networks,
  contracting with about 95 of US pharmacies,
  which means access is rarely a problem.
  Establishing networks involves
• Negotiating drug discounts and dispensing fees
  with pharmacies
• Assuring pharmacy compliance with quality and
  customer service standards
• Providing technical support to pharmacies
• PBMs may establish smaller preferred networks
  within broader non-preferred networks. Similar to
  a PPO plan, these preferred networks encourage
  members to fill prescriptions in network by
  offering lower copayments or coinsurance.
• Out of network benefits are still paid, but the
  member will have a higher payment. Pharmacies in
  these preferred (often regional) networks usually
  agree to lower prescription fees. This cost is
  counterbalanced by an increase in customers.

Claims Administration and Benefit Management
Pharmacy Network
Formulary
Rebates and Discounts
Drug Utilization Review
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Pharmacy 101 - Unit One PBM Overview
Formulary Management You cant have a PBM without
a formulary systema complex process which
determines drug utilization policies and
appropriate therapies. At the heart of this
system is the formularya continually updated
list of preferred drugs, typically available at
lower copays. These medications have been deemed
safe, effective and cost-conscious. Typically, a
formulary includes all generics and select brand
name drugs. At BCBSIL formulary development
goes first through the National Pharmacy and
Therapeutics Committee (PT Committee). The PT
committee is made up of independent pharmacists
and physicians and one rep from each of the owner
Plans. They use clinical evidence to evaluate
drugs on their efficacy, safety and uniqueness.
Claims Administration and Benefit Management
Pharmacy Network
Formulary
Rebates and Discounts
Drug Utilization Review
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Pharmacy 101 - Unit One PBM Overview

• Whats the difference between brand name drugs
  and generic drugs?
• Brand Name Drug A brand name drug is patented,
  which means that only the original drug
  manufacturer may produce and sell it. Examples of
  brand name drugs are Lexapro, Lipitor and
  Singulair.
• Generic Drug Once a brand name drugs patent
  expires, other companies may produce generic
  chemical equivalents of the drug. The generic
  drug is then sold under its chemical name.
  Generic drugs are usually cheaper than brand name
  drugs, in part because the manufacturer doesnt
  have to fund research and marketing. Today
  generics make up almost half of all
  prescriptions, and yet they represent around 20
  of prescription costs (IMS Health). Examples of
  generic drugs are Fluoxetine (Prozac) and
  Ibuprofen (Motrin).

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Pharmacy 101 - Unit One PBM Overview
Formulary Management (continued) The PT
Committee meets quarterly to keep up with new
therapies, clinical research and changes in FDA
guidelines. Drug costs arent evaluated at this
point the Committee only considers whether a
drug is clinically appropriate for the formulary.
BCBSILs Preferred Drug Committee then evaluates
the PTs recommendations and makes the final
decision on the formulary. The Committee of
medical and pharmacy directors and an actuary
representative uses pharmacoeconomic modeling,
pipeline considerations and other factors to
decide which drugs provide the most efficacy per
dollar. Generic and unique brand name drugs are
automatically added to the formulary. When two or
more drugs in a given class are equivalent, the
cheaper one is usually added. A key goal of the
formulary is to establish guidelines for
physicians and prescribers, so theyll dispense
drugs proven to be the most safe and effective
ones on the market. Cost is a factor, but its
secondary to clinical considerations.
Claims Administration and Benefit Management
Pharmacy Network
Formulary
Rebates and Discounts
Drug Utilization Review
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Pharmacy 101 - Unit One PBM Overview
Formulary Process at BCBSIL

• Primes National PT Committee
• Independent physicians and pharmacists and 1 rep
  from each of the owner Plans
• Evaluates and recommends drugs based on their
  efficacy, safety and uniqueness
• Costs are not considered at this stage

• Product Review Committee
• Prime conducts financial analysis of drugs

• National Select Formularies, Clinical Threshold
  List
• Prime presents formulary and financial analysis
  to BCBSILs Preferred Drug Committee

• BCBSILs Preferred Drug Committee
• Prime presents formulary and financial analysis
  to BCBSILs Preferred Drug Committee
• Committee customizes list, which becomes
  BCBSILs formulary

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Pharmacy 101 - Unit One PBM Overview
Part 2 What a PBM does

• Formulary Management (continued)
• Tiered Copayment Benefits
• Once drugs have been selected, they can be
  classified into tiers. The tiered formulary
  program is designed to save both members and
  employers money by encouraging members to use
  lower-priced generic and formulary drugs. The
  most common tier designs contain three tiers,
  though many insurance plans have created
  additional tiers (e.g. fourth tier for specialty
  or lifestyle drugs).
• Heres an example of a three-tier structure
• 10 copay - first-tier drugs (generics)
• 20 copay - second-tier drugs (formulary brand)
• 35 copay - third-tier drugs (non-formulary
  brand)
• Some benefit plans use a percentage-based tier
  system (e.g. 10/20/30). Manufacturers ideally
  want their products in the lowest tier possible
  as these drugs are the most utilized.

Claims Administration and Benefit Management
Pharmacy Network
Formulary
Rebates and Discounts
Drug Utilization Review
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Pharmacy 101 - Unit One PBM Overview
Part 2 What a PBM does
Rebates and Discounts As another critical
cost-saving tool, the PBM uses the formulary to
negotiate rebates and discounts with drug
manufacturers and pharmacists. Rebates The PBM
contracts with drug manufacturers on rebates (a
sum of money to be returned to the client usually
paid on a per pill basis). In return, the
manufacturers drug is included on the formulary,
which boosts both market share and utilization of
the drug. Rebates are determined on a
drug-by-drug basis, based on the anticipated
volume of drugs that will be sold. When there
are multiple drug options within a therapeutic
class, there is more competition between
manufacturers, which puts the PBM in a better
position to negotiate rebates. On average rebates
range from 5 to 25 savings, which are shared in
whole or in part with the client.
Claims Administration and Benefit Management
Pharmacy Network
Formulary
Rebates and Discounts
Drug Utilization Review
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Pharmacy 101 - Unit One PBM Overview
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Pharmacy 101 - Unit One PBM Overview
Part 2 What a PBM does
Rebates and Discounts (continued) Discounts PBMs
also negotiate dispensing fees and drug pricing
with network pharmacies. To join the network, the
pharmacy agrees to certain reimbursement amounts
and dispensing fees (paid to the pharmacy for
each drug dispensed). Pharmacies benefit from
this agreement because theyre guaranteed stable
reimbursement and a larger pool of customers. For
brand name drugs, pharmacies usually apply the
average wholesale price (AWP) or published
suggested retail price set by the manufacturer.
The actual price paid by a pharmacy to the
manufacturer is usually lower than AWP. There are
two primary sources for AWP pricing MediSpan
(used by Prime) and First Data Bank.
Claims Administration and Benefit Management
Pharmacy Network
Formulary
Rebates and Discounts
Drug Utilization Review
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Pharmacy 101 - Unit One PBM Overview
Part 2 What a PBM does
Rebates and Discounts (continued) Typically,
dispensing fees for generics are higher to
encourage pharmacies to promote generic
substitution and make sure the pharmacy dispenses
economically. In the case of generic drugs
where there may be multiple manufacturers with
wide price variations, PBMs set reimbursement
ceilings. The maximum allowable cost (MAC) is the
maximum price the PBM will reimburse a pharmacy
for generic and multi-source prescription drugs.
Some PBMs may have multiple MAC lists which
contain varying number of drugs and levels of
discounts. In the PBM industry the MAC list is
considered to be highly competitive and
proprietary. Heres an example of how a discount
for a generic drug could be formulated AWP 50
to 60 2.00 (dispensing fee) MAC
Claims Administration and Benefit Management
Pharmacy Network
Formulary
Rebates and Discounts
Drug Utilization Review
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Pharmacy 101 - Unit One PBM Overview
Part 2 What a PBM does
Drug Utilization Review (DUR) Often members have
prescriptions from multiple physicians, or they
fill them at different pharmacies. This makes it
tough to track drug utilization and benefit
compliance. Thats where the PBM comes in. The
PBM uses its database of member information to
conduct drug utilization reviews (DUR), which
flag potential drug interactions, therapeutic
duplication, drug misuse and quality of care. The
two most common DURs are concurrent and
retrospective. Concurrent DUR This DUR is
conducted at the point of sale and uses edits
or automated checks to compares the members
information with the prescribed drug, along with
other drugs the member is taking. This review
flags potential adverse drug interactions or
inappropriate utilization. When a claim is
flagged, the system informs the pharmacist of a
potential conflict. Regardless of where the
member fills the prescription, all pharmacies use
the same processing systems.
Claims Administration and Benefit Management
Pharmacy Network
Formulary
Rebates and Discounts
Drug Utilization Review
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Pharmacy 101 - Unit One PBM Overview
Part 2 What a PBM does
Examples of Concurrent Edits at BCBSIL
Edit Purpose
Drug-to-drug interaction screening Checks for interaction between drugs
Drug-to-gender screening Identifies contraindications based on a members gender
Duplicate therapy screening Checks for two or more medications from the same therapeutic category
Duplicate prescription screening Checks for a duplicate prescriptions
Drug-to-age screening Identifies contraindications for specified age groups
Drug dosage and duration screening Checks for dosages that are too high or too low and for duration of therapy
Drug regimen compliance screening Ensures member is taking medication as prescribed
Drug-inferred health state screening Reviews member history to infer state of health and compares the health state to the prescribed drug
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Pharmacy 101 - Unit One PBM Overview
Part 2 What a PBM does

• Drug Utilization Review (DUR) (continued)
• Retrospective DUR
• This DUR analyzes pharmacy claims history to
  identify potential prescribing and dispensing
  issues. For example, a DUR may reveal that a
  physician is consistently prescribing a brand
  name drug instead of a generic substitute. The
  review also detects individual prescriptions that
  may have been inappropriately used.
• BCBSIL does several retrospective DUR programs
  per year on topics such as
• Appropriate use of controlled substances
• Generic utilization
• Diabetes
• Hypertension medical management
• Acetaminophen overdosage

Claims Administration and Benefit Management
Pharmacy Network
Formulary
Rebates and Discounts
Drug Utilization Review
25
Pharmacy 101 - Unit One PBM Overview
Part 2 What a PBM does
The following topics provide a general overview
of the most common services PBMs offer.
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Pharmacy 101 - Unit One PBM Overview
Part 2 What a PBM does
Mail-Service Pharmacy Mail-service pharmacy is a
rapidly growing segment of the pharmacy industry.
In fact its estimated that by 2011 nearly 25 of
prescriptions will be filled through mail order
(Drug Benefit News, Nov. 2006). Almost all PBMs
offer mail-service options. Mail-service
pharmacies fill maintenance prescriptions that
are used on a continuing basis. Besides
offering convenience and cost-saving to members,
mail-service pharmacies can be more
cost-effective than traditional pharmacies.
Industry experts have noted that mail-service
prescriptions cost approximately 10 less than
retail-pharmacy drugs. This translates into a
nearly 85 billion savings in drug costs over the
next decade (Pharmaceutical Care Management
Association).
Mail-Service
Specialty Pharmacy
Prior Authorization
Disease Management
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Pharmacy 101 - Unit One PBM Overview
Part 2 What a PBM does
Specialty Pharmacy Specialty pharmacy services
are geared towards a small population of members
with complex and chronic conditions such as
HIV/AIDS, hepatitis C, infertility, hemophilia,
Crohns Disease, anemia, cancer and cystic
fibrosis. PBMs may assist with specialty pharmacy
by developing clinical and cost management
techniques to lower treatment costs.
Mail-Service
Specialty Pharmacy
Prior Authorization
Disease Management
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Pharmacy 101 - Unit One PBM Overview
Part 2 What a PBM does
Prior Authorization Prior authorization (PA)
manages certain high cost drugs and those that
could be inappropriately prescribed. When a drug
requires prior authorization, the member usually
contacts the physician who must obtain approval
from the PBM before the medication may be
dispensed. The PBM may require the doctor to
submit a preauthorization form with requested
clinical information (e.g. test results,
diagnoses). If approved, the member pays the
normal copay or coinsurance. If denied, the
member can still purchase the drug, but the drug
wont be covered. Only a few drugs require
prior authorization (e.g. anabolic steroids,
growth hormones). Heres an example of how a
prior authorization program can provide savings.
Growth hormones are prescribed for the treatment
of growth hormone deficiency. However, they can
be misused by body builders to increase muscle
mass and by others for anti-aging effects. A
prior authorization program would deny these
prescriptions and save nearly 2,000 for a
one-month supply.
Mail-Service
Specialty Pharmacy
Prior Authorization
Disease Management
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Pharmacy 101 - Unit One PBM Overview
Part 2 What a PBM does
Disease Management Most PBMs offer disease
management services to manage the
cost-effectiveness and treatment of members with
chronic illnesses. The PBM uses integrated
medical and pharmacy data to identify disease
management opportunities for conditions such as
hypertension, asthma, diabetes, depression and
specific cardiovascular conditions. Disease
management programs dont always lower
prescription costs. In fact they can increase the
drug spending. But the increase in drug therapies
can cut overall costs as members may be less
likely to need inpatient care.
Mail-Service
Specialty Pharmacy
Prior Authorization
Disease Management
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Pharmacy 101 - Unit One PBM Overview

• Key Points
• PBMs process and pay prescription drug claims,
  manage the formulary, create client programs, and
  negotiate rebates and discounts with
  manufacturers and pharmacies.
• A formulary is a continually updated list of
  preferred drugs, typically available at lower
  copays. These medications have been deemed as
  safe, effective, and cost-conscious.
• A generic drug is a cheaper chemical equivalent
  of a brand name drug with an expired patent.
• PBMs contract with manufacturers on rebates (an
  amount returned to the client for each drug
  used).
• PBMs negotiate discounts with pharmacies based
  on AWP and MAC pricing.
• PBMs use concurrent and retrospective DURs to
  flag potential drug interactions, therapeutic
  duplication, drug misuse and quality of care.

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Pharmacy 101 - Unit One PBM Overview
Part 3 Cost Savings
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Pharmacy 101 - Unit One PBM Overview
Part 3 Cost Savings
A PBM can significantly lower drug costs.
According to the Pharmaceutical Care Management
Association (PCMA), PBMs on average reduce costs
by 25. Collectively, PBMs administer claims for
over 210 million Americans, and over the next
decade, theyre projected to save 1.3 trillion
dollars in drug costs.
Data provided by the PCMA.
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Pharmacy 101 - Unit One PBM Overview
Part 3 Cost Savings
A PBM can significantly lower drug costs.
According to the Pharmaceutical Care Management
Association (PCMA), PBMs on average reduce costs
by 25. Collectively, PBMs administer claims for
over 210 million Americans, and over the next
decade, theyre projected to save 1.3 trillion
dollars in drug costs.

• PBMs can negotiate discounts as much as 18
  savings on brand name drugs and 47 on generic
  drugs.

Data provided by the PCMA.
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Pharmacy 101 - Unit One PBM Overview
Part 3 Cost Savings
A PBM can significantly lower drug costs.
According to the Pharmaceutical Care Management
Association (PCMA), PBMs on average reduce costs
by 25. Collectively, PBMs administer claims for
over 210 million Americans, and over the next
decade, theyre projected to save 1.3 trillion
dollars in drug costs.
PBMs can save anywhere between 6 to 9 with DUR
programs.
Data provided by the PCMA.
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Pharmacy 101 - Unit One PBM Overview
Part 3 Cost Savings
A PBM can significantly lower drug costs.
According to the Pharmaceutical Care Management
Association (PCMA), PBMs on average reduce costs
by 25. Collectively, PBMs administer claims for
over 210 million Americans, and over the next
decade, theyre projected to save 1.3 trillion
dollars in drug costs.
PBM therapeutic interchange programs can save
from 1 to 4.5 on drug spending.
Data provided by the PCMA.
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Pharmacy 101 - Unit One PBM Overview
Part 3 Cost Savings
A PBM can significantly lower drug costs.
According to the Pharmaceutical Care Management
Association (PCMA), PBMs on average reduce costs
by 25. Collectively, PBMs administer claims for
over 210 million Americans, and over the next
decade, theyre projected to save 1.3 trillion
dollars in drug costs.
Prior authorization can save 1 to 6 on drug
spending.
Data provided by the PCMA.
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Pharmacy 101 - Unit One PBM Overview
Part 3 Cost Savings
A PBM can significantly lower drug costs.
According to the Pharmaceutical Care Management
Association (PCMA), PBMs on average reduce costs
by 25. Collectively, PBMs administer claims for
over 210 million Americans, and over the next
decade, theyre projected to save 1.3 trillion
dollars in drug costs.
PBMs can negotiate rebates which reduce annual
drug spending by 3 to 9.
Data provided by the PCMA.
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Pharmacy 101 - Unit One PBM Overview
Part 3 Cost Savings
A PBM can significantly lower drug costs.
According to the Pharmaceutical Care Management
Association (PCMA), PBMs on average reduce costs
by 25. Collectively, PBMs administer claims for
over 210 million Americans, and over the next
decade, theyre projected to save 1.3 trillion
dollars in drug costs.
Mail service drugs can save an average 27 on
brand name drugs and 53 on generic drugs.
Data provided by the PCMA.
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Pharmacy 101 - Unit One PBM Overview
Part 3 Cost Savings
A PBM can significantly lower drug costs.
According to the Pharmaceutical Care Management
Association (PCMA), PBMs on average reduce costs
by 25. Collectively, PBMs administer claims for
over 210 million Americans, and over the next
decade, theyre projected to save 1.3 trillion
dollars in drug costs.
Specialty pharmacy can lower annual costs as high
as 250,000 per member.
Data provided by the PCMA.
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Pharmacy 101 - Unit One PBM Overview
Part 4 Introducing Prime Therapeutics
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Pharmacy 101 - Unit One PBM Overview
Part 4 Prime Therapeutics
Our PBM, Prime Therapeutics, serves over 10
million lives. Owned by ten BCBS plans, Prime has
no ties to pharmacies. Its business model aligns
with ours in its incentive and achievement of
cost-saving goals. It also provides transparency
of costs and rebates, flexibility, customization
for local markets and solid customer service. We
benefit from this partnership because we have
more control of care and costs than we would with
an outside vendor. All savings from discounts are
passed through to employer groupsthere is no
spread pricing.

• Primes Services
• Prime generally provides the following services.
  Note that in some cases some of these services
  may be handled by local pharmacy programs instead
  of Prime.
• Claims processing withtwo-second average online
  adjudication
• Paper claims
• Benefit management
• Pharmacy network development and administration

• Custom reporting through Blue Insight
• Automatic concurrent and quarterly retrospective
  DUR to identify opportunities to improve quality
  and cost-savings
• Support for step therapy edits and QVT

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Pharmacy 101 - Unit One PBM Overview
Part 4 Prime Therapeutics

• Prime also offers PrimeMail mail order service,
  which provides significant savings. PrimeMail
  information can now also be easily accessed from
  the member website, MyRxHealth.com on which
  members can
• Order prescription refills
• Obtain order status updates
• Review benefit information
• Compare prices of both brand name andgeneric
  drugs at mail and retail
• Track prescription history

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Pharmacy 101 - Unit One PBM Overview
Part 4 Prime Therapeutics
Prime also administers our Medicare Part D plans,
which help beneficiaries pay for a significant
share of their prescription costs. Prime assists
Medicare beneficiaries with enrollment,
eligibility and pharmacy-related questions.
Another key service is PrimeImpact, a clinical
program that targets 14 core clinical categories.
PrimeRxSpecialty provides member care, drug and
disease information to members with chronic,
possibly life-threatening conditions.
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Pharmacy 101 - Unit One PBM Overview
Part 4 Prime Therapeutics
The chart below shows some of the core programs
offered under PrimeImpact. Note that not all of
these programs are used by the Blues plans. You
can learn more about these programs in Unit Two
Pharmacy Programs Overview.
Physicians
Utilization Management
Member Education
Clinical Reporting
Value-Based
Prime RxSpecialty

• Education
• Safety
• Adherence
• Generics
• Benchmark reporting

• Step therapy
• Prior authorization
• Quantity limits
• Retro DUR
• Concurrent DUR
• Medical/Rx integration

• Specialty network
• Product identification
• Benefit design
• Disease management
• Utilization management

• Education
• Print
• Web
• Compliance

• Generic opportunity
• UM estimated savings
• UM actual savings
• Adherence

• Benefit design
• Medical/Rx integration
• Reporting
• Member direct
• Physician direct

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Pharmacy 101 - Unit One PBM Overview
Part 4 Prime Therapeutics
Comparison of Functions between Local Pharmacy
Departments and Prime Therapeutics The local
pharmacy departments and Prime have different
responsibilities. Here is a brief overview of
some of their individual functions. Note that
there may be some variation between the four
plans, but this gives you a general overview of
the breakdown of functions. Oklahoma will be
converted to Prime in 2008.
Local Pharmacy Depts.
Prime Therapeutics
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Pharmacy 101 - Unit One PBM Overview
Part 4 Prime Therapeutics
Comparison of Functions between Local Pharmacy
Departments and Prime Therapeutics The local
pharmacy departments and Prime have different
responsibilities. Here is a brief overview of
some of their individual functions. Note that
there may be some variation between the four
plans, but this gives you a general overview of
the breakdown of functions. Oklahoma will be
converted to Prime in 2008.
Local Pharmacy Departments
Prime Therapeutics

• Adjudicates pharmacy claims
• Dispenses mail order prescriptions
• Negotiates rebates/discounts and supports retail
  pharmacy contract
• Provides customer service
• Supports step therapy prior authorization
• Supports account management
• Supports reporting

• Makes decisions on all pharmacy benefits
  (copays, preventive drug lists, drug exclusions,
  etc)
• Makes decisions on the formulary list
• Makes decisions on clinical programs (step
  therapy, prior authorization, quantity limits,
  etc)
• Develops innovative programs (CAP, controlled
  substance program, MAIL program)

Local Pharmacy Depts.
Prime Therapeutics
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Pharmacy 101 - Unit One PBM Overview
Part 5 Reporting
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Pharmacy 101 - Unit One PBM Overview
Part 5 Reporting

• Prime provides accounts with comprehensive
  reports on prescription drug utilization. The
  reports are designed to quickly identify trends
  and pharmacy spending, as well as potential
  opportunities for plan design improvement. The
  reporting package consists of the following
  components
• Executive Summary an overview of utilization,
  including total cost, plan and member paid,
  pricing and network performance, savings, drug
  mix and member submitted claims for both retail
  and mail order.
• Key Indicators Summary a quarterly breakout of 9
  key components and BCBSIL book of business
  benchmarks for comparison purposes. Summary also
  provides group specific graphs for total plan
  paid for top 10 drug classes.
• Additional Report Sections include generic and
  formulary experience by retail and mail order,
  the top 25 drug classes by ingredient cost and by
  volume and the top 50 drugs by ingredient cost
  and by volume.
• Ad-hoc Reports based on clients needs
• The report package provides an in-depth look at
  the overall prescription drug utilization and
  cost and gives employers the opportunity to
  increase cost savings by adding clinical
  programs, such as prior authorization, step
  therapy or changing their benefit design.
  Additionally, the report package allows groups to
  see the effectiveness of their plan design and
  implemented clinical programs.

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Pharmacy 101 - Unit One PBM Overview
Conclusion
Proven in the marketplace, PBMs promote quality
of care and reduce costs for their clients.
Although PBMs can vary in their capabilities and
responsibilities, their primary function is that
of claims processing, record-keeping, formulary
management, reporting and rebate negotiation with
drug manufacturers. As we have seen, many PBMs
such as our own Prime Therapeutics offer
additional programs such as disease management,
drug utilization review, mail-order pharmacy and
network management.
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Pharmacy 101 - Unit One PBM Overview

• Key Points
• PBMs on average reduce overall drug costs by 25.
  Collectively, they administer claims for over 210
  million Americans, and over the next decade,
  theyre projected to save 1.3 trillion dollars
  in drug costs.
• Some of Prime Therapeutics main services include
  claims processing, reporting, benefits
  management, network development, utilization
  management and mail service.
• Members can use MyRxHealth.com to order
  prescriptions, review benefits, compare drug
  prices and track prescription history.
• Prime and the local pharmacy departments have
  different responsibilities. The local pharmacy
  department makes decisions on benefits, formulary
  and clinical programs. Prime supports us by
  adjudicating pharmacy claims, dispensing mail
  order prescriptions, negotiating
  rebates/discounts, creating reports, etc.

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Pharmacy 101 - Unit One PBM Overview

• Summary
• This concludes the PBM Overview. You should now
  be able to
• Describe the basic features of a pharmacy
  benefit manager (PBM)
• Explain Primes and BCBSILs roles in
  decision-making and administration
• Describe BCBSILs report utility