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How Pharmacy Benefit Managers Impact Drug Pricing, Hospital and Patient Care, Payers, and More

How Pharmacy Benefit Managers Impact Drug Pricing, Hospital and Patient Care, Payers, and More

In the United States, the cost of diabetes-related drugs, such as insulin or Victoza, cost 10 times as much than if you were to buy them outside the US. Price inflation of prescription drugs are not new but it is a unique problem for the United States.

Who’s to blame for the skyrocketing costs of prescription drugs?

Pharmacy benefit managers (PBMs)

They may not be the only culprit, but they contribute largely to the problem. Competing drug companies buy access to PBM formularies so their products will be chosen as the recommended choice.

By paying rebates and other fees to a PBM, a drug manufacturer can take a bigger piece of the sales pie. To recoup the large rebates and other fees paid to the PBMs, drug manufacturers have to increase the list price of drugs.

The result is skyrocketing drug prices.

But the cost of prescription drugs is not the only thing that PBMs can impact in both negative and positive ways.

How Pharmacy Benefit Managers Work

Historically, PBMs act as middlemen entities that process prescription medication claims and plan sponsors for a small fee. They provide services and educational programs to aid patient. They also serve as an intermediary between insurers and other healthcare members. This allows them to negotiate large customer contracts and for pharmaceutical companies and pharmacies to get the best rate.

What PBMs do

  • Negotiate rebates to get the most affordable option
  • Operate mail order pharmacy to deliver medications directly to patients
  • Ensure patient compliance in taking prescribed medications
  • Manage formularies and process claims from patients and pharmacies
  • Manage distribution among pharmacies, connect pharmacies to orphan drug supplier, and provide other specialty services.

The role was clear-cut and clean until they leveraged their position as middlemen to impact nearly every aspect of the prescription drug marketplace. Even an independent pharmacy is not spared from the impact that PBMs make.

Impact of PBMs on hospitals and patient care

PBMs are exploiting a Medicare provision that allows them to charge remuneration fees directly and indirectly to pharmacies within their network. To price out the competition, particularly a local independent pharmacy where patients have a personal relationship with pharmacists, they increase the fees for using in-house and member pharmacies as part of Medicare reimbursement.

With the way the incentives are structured, PBMs retain more of the discounts and fees, driving up costs on Medicare. Since the pricing model used is fiercely guarded, pharmacy benefit managers continue to hide the costs paid by health insurance companies, patients, and the government.

Impact of PBMs on American Health Care

PBMs generate revenue in three ways—administrative fees, pharmacy spread, and rebates.

  • Administration fees are charged to plan sponsors and manufacturers. The additional fees and payments go straight to PBM
  • Pharmacy spread is a PBM practice where the plan sponsor is charged a higher price than what is reimbursed to the network pharmacy. The difference, also known as a clawback, is pocketed by the PBM.
  • Rebates are discounts on a mediation that drug manufacturers provide in exchange for PBMs covering a drug product from a paying manufacturer. Since the formularies that the plan sponsors cover are made by the PBMs, they can choose which drugs will be used even when there are less expensive drug alternatives.

All these resulted in high prescription drug prices, restricted patient access to pharmacies, and the negative impact of limited formularies.

Impact of PBMs on employers/payers

Payers can benefit from a PBM through management of prescription drug benefits for members. Because the contracts are often one-sided and complex, partnering with PBMs often results in limited savings.

Only 30% of employers understood the clauses of their PDM contracts, according to a study by the National Pharmaceutical Council.

Research from Cigna showed that employers sponsoring their own health plans can save annually with integrated medical and pharmacy benefits. They can also bolster member patient care and self-management.

Although tackling prescription spending without the help of a PBM is beneficial, employers/payers still need to weigh the pros and cons of partnering with PBMs.

Lack of Regulation and Transparency

Through all these scenarios, a commonality is the lack of federal regulation and transparency that allowed PBM practices to take advantage of their role in the healthcare marketplace and make money at the expense of patients, payers, and pharmacies.

Something needs to be done.

Lawmakers are pushing to fill in what’s lacking and make PBMs more accountable.

In California, legislations are being proposed to boost transparency in PBM dealings. One of these legislations require pharmacy benefit managers to provide information about how much they paid for a drug, including administrative fees, acquisition costs, and rebates received.

 

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HOW PHARMACISTS CAN SURVIVE AMAZON

Darshan Kulkarni Pharm.D, MS, Esq.

Amazon has made several recent moves including hiring new health IT experts, and physicians to make a big foray into health. Their recent disclosure that they want to enter the pharmacy world and their recent acquisition of PillPack makes pharmacists go – what does this mean for me? Will there be a reduced need for pharmacists?

As Global Positioning Satellites (GPS) became increasingly popular, the demand for cartographers dropped significantly. Digital maps created and updated in real time compared an individual’s current location to their desired location and told the individual how to get to the final location. Cartographers began to worry about their jobs and livelihood. Amazon’s overtures into pharmacy have similarly concerned pharmacists. However, since the concerns are similar, maybe the results will be too. There is a projection that between 2016 and 2026, the demand for cartographers will increase by 19%. This is attributed to an increased use of maps by government planning such organizations and the realization that there are some responsibilities that cannot be automated and delegated away. Similarly, pharmacists who hope to operate like they did 20 years ago are unlikely to survive. However, those who adapt, would likely be very much in demand.

What Amazon taketh away, Amazon may also giveth

Amazon has rarely been a manufacturer. Amazon typically connected businesses with potential clients and served as a marketplace. The marketplace originally started as being a place for them to sell their wares, but eventually expanded to become the Amazon Marketplace where anyone can use Amazon as a virtual store and sell their goods. As most know, goods sold by sellers on Amazon often compete against goods sold by Amazon itself, and the orders may often even be fulfilled by Amazon. Amazon has been happy to do this because they still make a profit with such an arrangement. So, one must wonder whether the pharmacy of the future will become a competitor to PillPack or will instead partner with them.

Accordingly, pharmacists may be able to compete or deal with a post-PillPack pharmacy in one of the four following ways:

  • 1) Amazon Marketplace

Competing against PillPack in the near future will likely require demonstrating specialization and knowledge. Cartography grew because of the creation of Hyper-Local Communities (HLCs), These HLCs looked at the location of the nearest Dairy Queen but also looked for shops surrounding the Dairy Queen? This was unable to be achieved by large mapping companies. In the case of pharmacy, pharmacists could develop a specialization by connecting with unique providers or providing unique services or simply products that cannot be easily mailed. This may include veterinary prescriptions, schedule II drugs, specialty drugs, emergency antibiotics, compounding or providing uniquely personalized care.

  • 2) Delivering Services

While Amazon has excelled at delivering goods, it has not demonstrated expertise in delivering services. As a result, CVS and Walgreens are looking to capitalize by partnering or hiring nurse practitioners or other mid level professionals and enabling them to engage with patients. Because these providers may be more likely to educate their patients at the pharmacy, diagnosed patients may find fulfilling their prescriptions on site to be more convenient.

  • 3) New Partners

Pharmacists traditionally think of Prescription Benefit Managers (PBMs) as their enemies. However, despite PBMs and Group Purchasing Organizations (GPOs) who are all supposed to theoretically help patients by keeping costs down, pharmacists feel squeezed and don’t have enough of a margin. With a new Amazon entrant, a pharmacy may now effectively assert that PBMs, GPOs and Pharmacies are likely to perish if they don’t survive together. Accordingly, this may enable better pricing opportunities and better opportunities for patients.

  • 4) Branded Prescriptions

Being a pharmacist in the Amazon Marketplace may enable prescription fulfillment across the state if not the country. Amazon Marketplace may enable a pharmacist sitting in New York City to sell a prescription to a patient in Albany. In some cases, the pharmacy itself may deliver to the new patient, or create a new category of “celebrity pharmacists” who simply are trusted to provide appropriate care, while a PillPack may do the actual fulfillment and delivery of the prescription.

CONCERNS

While Amazon’s entry may provide interesting partnering opportunities, it is important that pharmacists consider relevant laws. The stark, anti-kickback, False Claims Act and civil monetary penalties law will each come into play. Accordingly, pharmacists hoping to partner with other providers, but should be careful with such endeavors since it may expose them to potential legal liability.

THE FUTURE

It seems likely that a push by Amazon into pharmacy may impact individual pharmacists who may see a decrease in patient volumes. This is likely to scare pharmacies and pharmacists. However, it seems like this may be a temporary situation and lead to more opportunities in the future.

If you are interested in hearing more about how Amazon affects pharmacists, the implications of an Amazon Pharmacy and patient centricity, or how Amazon’s Prime membership discounts might work with medications, search for the Pharmacy Podcast Network wherever you listen to your favorite podcasts or reach out to me directly on Twitter (@DarshanTalks).

 

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THE PHARMACISTS ROLE IN DISEASE STATE MANAGEMENT PROGRAMS

Disease management aims to prevent or minimize the effects of a disease through integrated care. This involves disease management programs that are designed to improve the quality of life and health of persons with chronic conditions and to reduce healthcare costs associated with complications that are completely avoidable.

The idea is to treat chronic conditions more quickly and more effectively so disease progression can be slowed down.

Disease management uses a system of coordinated health-care interventions and one that empowers individuals to work with different health care providers to prevent complications and manage the disease. It operates on the basis that educated individuals are better able to manage their disorder because they know where to seek and receive better care.

A comprehensive disease management program comes with more benefits.

  • Improve access to care
  • Improve patient self-management
  • Improve safety and quality of care
  • Save patients from high financial costs without sacrificing quality or patient satisfaction

Furthermore, it enhances the efforts of healthcare providers to improve the healthcare programs offered on a population basis. Care coordination is one of the primary concerns of these providers and an integrated multidisciplinary disease management program is the solution.

One of the members of the multidisciplinary team of providers are pharmacists who play a role in assisting individuals in managing their conditions.

What is their role in disease management programs exactly?

Pharmacists in Disease Management Programs

A pharmacist deals with both patients and health care providers, making them a link between the two even when the interaction is not linear.

Trained pharmacists, for example, can evaluate medication therapies and identify drug-related problems, enabling them to help patients manage these problems.

On the other end of the spectrum, a pharmacist can educate physicians about treatment guidelines based on outcomes research conducted.

This is why pharmacists have a significant impact on the development and implementation of disease management programs. Whenever improvements are needed, they can also provide expert information, especially on medications and pharmacotherapy.

In a published study entitled Pharmacist-Led Chronic Disease Management: A Systematic Review of Effectiveness and Harms Compared to Usual Care, increased involvement of clinical pharmacists are encouraged.

It is believed that their role in patient care will enable patients to have access to primary care services and improved health care.

This was backed by the H.R.592 – Pharmacy and Medically Underserved Areas Enhancement Act that was recently introduced in House. The bill aims to improve access to health care through the patient care services offered by pharmacists.

It will also help established two things:

  • Pharmacists as healthcare providers
  • Pharmacists’ services covered through Medicare part B, especially in medically underserved communities.

It is clear that pharmacists must be involved in disease management programs. Their involvement varies depending on each practice setting.

  • Assists in the identification of patients
  • Conduct monitoring for specific diseases
  • Provide patient education
  • Provide direct patient care
  • Help ensure medication adherence
  • Help reduce inappropriate medication use
  • Evaluate disease management program outcomes

Different Pharmacist Interaction with Patients with Different Diseases

Depression

According to the US Preventive Services Task Force’s (USPSTF), screening for depression can help reduce or eliminate depression symptoms, something that pharmacists can help with.

As a member of a collaborative care team, a pharmacist can:

  • Carry out depression screening services.
  • Monitor patients who are predisposed to depression symptoms because of their medication regimens.
  • Educate and communicate with patients in print or verbally.
  • Identify symptoms of depression in patients who avoid seeking medical help because of the social stigma of mental health issues and then extend support.
  • Make themselves accessible for advice on health care and depression medication and adherence.

Diabetes

Blood glucose testing and other routine and simple tests are offered in pharmacies. For diabetes patients who do not have an established relationship with a primary care physician, this option provides a more accessible and less-expensive alternative.

These tests are then used by pharmacists to identify those with potential diagnosis and to help them find appropriate medical attention. As the most accessible healthcare provider, pharmacists are key in the betterment of diabetes patients’ health.

  • Educate patients about the disease through educational programs often carried out in a less formal setting.
  • Educate patients on how to use blood glucose monitor equipment at home.
  • Regularly monitor glucose levels both self-tested and laboratory tested.
  • Monitor patient compliance with scheduled clinic and laboratory appointments and prescribed therapies.
  • Provide medication management and review.
  • Screen for interactions and infrastructure actions for drug/drug, drug/food, drug/lab and drug/disease.

Asthma

Pharmacists not only provide asthma patients with the medication they need but also valuable resources to help them understand pharmacological agents for treating and managing their disease.

Their knowledge about the disease and recommended medication are valuable and beneficial to patients. Recent studies show that increased awareness about asthma reduced the numbers of asthma-related missed days at school and work, hospitalizations, emergency department visits, and deaths.

  • Educate patients about the proper use of inhalation devices, especially those that are overwhelmed with diagnosis and treatment plans.
  • Provide educational programs with an emphasis on warning signs of asthma attacks, triggers, and patient adherence.
  • Conduct a periodic review of the kind of inhaler technique patients’ use.
  • Regularly monitor peak-flow function tests.
  • Ensure compliance assistance and manage chronic medication use.

Hypertension and Cholesterol

When the American Heart Association released its new guidelines that specify 130/80 is the new high, many people found themselves with high blood pressure. This added 30 million people to the nearly half of Americans that have hypertension.

While the new guidelines spelled bad news for patients, it offers independent community pharmacies an opportunity to further serve them and boost business at the same time.

  • Offer patients blood pressure screenings.
  • Assist with medication adherence and prescription management.
  • Assist patients with smoking cessation program.
  • Educate patients about hypertension and cholesterol, their effect on life and health, and the common comorbidities and conditions.
  • Monitor compliance with diet and exercise regimens.
  • Perform periodic blood pressure and cholesterol level checks.
  • Screen for interactions and infrastructure actions for drug/drug, drug/food, drug/lab and drug/disease.

Conclusion

Disease management programs are an opportunity to improve patient outcomes. But it can only be achieved with complete commitment from the members of the multidisciplinary team. In terms of collaborative development and the implementation and improvement of disease management programs, the pharmacist has the leadership role.

Submitted by Prestige Pharmacy | Michigan 

Sources:

http://www.amcp.org/WorkArea/DownloadAsset.aspx?id=9295

https://www.ncbi.nlm.nih.gov/books/NBK362935/   

https://www.congress.gov/bill/115th-congress/house-bill/592  

https://www.pharmacytimes.com/publications/issue/2017/august2017/pharmacists-can-play-important-role-in-depression-screening

https://www.pharmacytimes.com/contributor/marilyn-bulloch-pharmd-bcps/2017/11/pharmacists-play-a-key-role-in-diabetes-management

https://www.pharmacytimes.com/publications/issue/2014/april2014/managing-asthma-the-pharmacists-role  

https://www.pbahealth.com/high-blood-pressure-guidelines/

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