The PBM Industry

The Pharmacy Benefit Manager (PBM) industry has gone from being a claims processor (simplifying paying claims for the insurance payor) to a manager of the entire pharmacy benefit for hundreds of millions of patients. Is not uncommon for a PBM to tout the savings they garner the system thru their management of the drug formulary, restrictions on expensive medications, and a variety of processes that come close, or even cross the boundary, between the PBM being a “manager” and the PBM acting as a physician or pharmacist.

The PBM industry generally takes credit for saving the health care system billions of dollars yearly. But being a pharmacist, I often have wondered how much of these “savings” are due to the PBM itself, and how much is directly attributable to the actual care providers. I find it interesting that the PBM industry is a pure middle-man in the health care industry. As an industry, they have very little on the line as they are not generally responsible for the total health spend. Manufacturing savings for the PBM may be as simple as creating downward pressure on the price paid for product and services. The PBM can effect savings in this manner without actually jeopardizing their own bottom line significantly. While the above characterization is certainly not complete, it does represent the essence of the entire industry.

Quality emphasis

CMS and others are beginning recognize that the current system places too much emphasis on product and not enough on service. Recent initiatives are starting to emphasize quality of service in the equation, and these measures are NOT something that a manager can do themselves. They require the providers (and in this case these are pharmacists) to accomplish. Pharmacists are key because they actually can see, speak to, and evaluate the patient and their medication use. Recently, some PBMs have even taken steps in the right direction and initiated programs to reward pharmacies for high quality work. While these initiatives emphasize metrics that are simplistic (mostly measuring compliance), and the actual financial rewards are not at levels that could sustain high quality performance in a pharmacy, they are steps in the right direction.

Pharmacist Impact

Pharmacists can have significant impacts on savings in healthcare. Our own pilot study that included 600 patients with a local payor is showing significant savings effected by pharmacists acting as clinical interventionists. These savings, calculated by the payor using a rigorous statistical analysis, show that a pharmacy can save the health care system several thousand dollars per patient per year.

Now the US Army is reporting similar results; using pharmacists as interventionists can create significant savings and a positive return on investment. And this type of evaluation is starting to catch the eyes of payors. In Iowa, the payor involved in our pilot is looking to create a network of high performing pharmacies by next year (2016), and that network would be paid using a different model than the one currently used in the industry.

Changing Times

The current iteration of the Star Measures are simplistic, but they are a good starting point. We fully expect that the Star measures will evolve to include actual disease state outcomes and measures that better reflect the savings in total health spend. These changes are not compatible with the current PBM centered “manager” model. A PBM cannot manage patients in this manner, only a provider with face-to-face access to the patient can do this.

Increased emphasis on outcomes means that the PBM, who does not have any skin in the game currently, will either become less important, or will need to shoulder more responsibility for the outcomes of the patient. Either way, the days of easy profit as a middle-man may be numbered.  The current methods leveraged by the PBMs to create a stripped down model of pharmacy will not improve outcomes. The cheaper  drug does not necessarily mean better healthcare outcomes and a lower total healthcare spend.

These changes have significant implications to pharmacists and pharmacies that have adopted the stripped down model of pharmacy. Going forward, it will not be enough to simply fill a prescription. It is what is done after the prescription is filled, that time spent with the patient, that will become important. Pharmacists need to rediscover their inner clinician. Those skills learned in pharmacy school will need to be polished and practiced once again, for many, for the first time since graduating pharmacy school. Pharmacists need to start stepping up their games now. Start making every encounter with your patients count!

The Future

Imagine a future where it is the pharmacy that has negotiating power. A payor will negotiate with a high performing pharmacy to have them included in their network. Pharmacies and pharmacists are paid for the care they provide based on real clinical outcomes. Savigs effected by pharmacy and pharmacist are shared with the  pharmacy and pharmacist. A vision like this is possible, and it is a far cry from where pharmacy stands today, begging to be included in narrow networks with impossibly thin margins. In order to get there from here, pharmacists need to start now.