Beju Rao, Amruta
Wilma Kidd, Satori Solutions, Inc.
While health care continues to be the talk-of-the-day, the increasing cost of prescription drug benefits dominates the healthcare headlines. To understand the significance of these stories, we need a quick tutorial on “What is a PBM?” PBMs or Prescription Benefit Management (PBM) are companies that provide a host of services to manage prescription drug benefits. This includes, but is not limited to, claims processing and payment, pharmacy network contracting, drug formularies, negotiating discounts and rebates with pharmaceutical companies, and more importantly, determining reimbursement rates for pharmacies and consumer costs.
Over the last ten years, there has been a significant increase in PBM mergers and acquisitions. Some of the larger player, such as CVS, Express Scripts and Optum Rx, have acquired some of the most familiar names in the pharmaceutical arena. For instance, in 2013, CVS acquired Coventry Health Care; in 2012 Medco Health Solutions, Inc. was acquired by Express Scripts; and, in 2015, Catamaran was acquired by Optum Rx. Fast forward to 2018, and we are seeing even larger mergers occur with of CVS’ announcement to merge with Aetna and Express Script’s announcement to merge with Cigna. If approved, these mergers will give these PBMs increased functionality with access to health insurance functions. Not only will it eliminate the need for third party relationships, but it introduces best practices for processing claims, managing health outcomes and hopefully, some reduction in drug benefit costs. Of note is that Optum Rx is already under the United Healthcare umbrella. Are we seeing the new wave of the future, where PBMs not only control the drug benefits but have a direct impact on the delivery of healthcare benefits as well?
So what do these mergers mean in a world of accelerating pharmacy benefit costs. Maybe nothing or maybe something. What we do know is that these continued mergers and acquisitions increase the ability of PBMs to control the marketplace. We also know that PBMs control price negotiations and processing in a marketplace where the larger PBMs control over 50% of the market share. Continued mergers and acquisitions could potentially create an environment that makes it difficult for pharmacies, insurers, benefit managers etc. to negotiate prices. In many instances, PBMs increasingly control drug rebates that may reduce their overall cost of drug purchases while having little to no impact on benefit and consumer out-of- pocket costs. Keep in mind that PBMs are a larger piece of the complex pharmaceutical supply chain where wholesalers set the cost of drugs for PBMs and pharmaceutical companies set the cost of drugs with the wholesaler. Downstream, the consumer is often on the losing end.
Consumer Caught in the Middle
So what can the consumer do? Well, many may opt to use a drug discount card, bypassing the third party dilemmas with their drug benefit plan and PBMs. Increasingly consumers are using online tools to find the best deals. One such tool, Good Rx, allows consumers to easily research the best prices in their local areas. For instance a search for a commonly used drug to treat high cholesterol, Atorvastatin 30, 40mg tablets, costs ranged from $7.84 to $42.75 with a discount coupon depending on where the drug is purchased. Overall, it costs more to purchase the drug at a chain pharmacy than it did at a large grocery store chain. The same proved to be true for Losartan 30, 40 mg tablets costs ranged from $6.60 to $29.90 with the highest cost at a large chain pharmacy. Of course, 90-day prescriptions are cheaper.
These findings raise the question of how much of the savings are being passed from PBMs to payers and consumers and whether it’s cheaper to purchase drugs with a drug discount card than use their drug benefits and if so, why. This leaves one to wonder about the role of PBMs and their ability to deliver lower drug costs to its clients. After all, there is little transparency in the pricing of drugs from the pharmaceutical company to the wholesaler to the PBM. There is also an increased due diligence by focusing more on data analysis and software tools that can be used by payers and employers to reduce cost of pharmaceutical drugs for consumers and providers. We suggest the use of an omni-channel mechanism wherein corporate business managers, provider supply chain operators, and payers negotiate better overall rates for pharmaceutical drugs for consumers and providers. Amruta Inc and Satori have partnered to create and offer just such a tool and business solution.
So What Is Next
In the end, no one knows the true impact of continued consolidations across the pharmacy industry. Will it bring a decrease in overall prescription drug costs? Will these large mergers allow for improved negotiations of rates? Will some portion of the actual rebate be passed along to consumers and providers? What we do know that the merger evolution has created a need for comprehensive data analyses and competitive rate negotiations about tax help san diego stopmyirsbill.com. As we continue to monitor PBM mergers and its impact on prescription drug costs, we will also continue to consider the role and impact of discount drug cards on drug costs and out of pocket expenses to the consumer.
We’ve only scratched the surface of this burgeoning issue. Please look for our next white paper where we dig a little deeper into the comparison ofCardiff Nursery Medicare-Medicaid prices and PBM rates for 10 highly prescribed drugs to those of discount drug cards and more information on how our software tools and business solutions will aid your business in addressing prescription drug cost.
 Good Rx is a third party company with which we are not affiliated in any way.