PBMs To Benefit From Healthcare Reform

Introduction
Healthcare reform is bringing about rapid change to the marketplace. Industry members are challenged by administrative changes, cost increases, government regulation and organizational effectiveness. They are deeply intertwined with conventional healthcare delivery and management practices --and rightly concerned about better patient care and increased costs. Other healthcare industry entities are prepared to make the most of new opportunities. One of these is the pharmacy benefit manager or "PBM" segment, a sector wellversed in taking on industry change and profiting from it.

Government Prescription Program Launches

When the National Prescription Drug card was rolled out in 2004 as the predecessor for Medicare Part D coverage, prescription benefit managers (PBMs) were in the center of the action. Based on their abilities to manage member/patient communications and complex prescription benefit plans, coupled with strong eligibility management and reporting capabilities, they executed their own programs and partnered with managed care organization to administer their programs. When the program migrated completely to Medicare Part D prescription drug coverage, PBMs continued to benefit from increased numbers of patients with coverage prescription drug coverage.

Healthcare Reform Penalty As Enrollment Driver

A primary driver is the requirement that U.S. citizens purchase healthcare insurance and to be competitive, health plans will offer prescription benefits in their coverage. Assuming more citizens will purchase health insurance rather than pay a penalty, PBMs will see their patient/customer base grow. Much of the PBM business is based on sheer patient volume. Increased patient load translates to more opportunities across the PBM business model which includes retail claims processing, mail order/specialty pharmacy, medication therapy management and other services. A national program will allow them to reach deeper into various markets and patient populations, growing new revenue streams along the way.

Employer Health Plan Mandate

Although the requirement was delayed from 2014 to 2015, employers with more than 50 employees will be required to offer health benefits to their workers. To help make this affordable, care/cost management will be critical. On the prescription benefit side, PBMs will play a key role in care and cost management for small employers who cant afford to spend a lot on benefits. They have minimal benefit administration staff so PBM support and its associated reporting will be greatly valued. Benefit plans administered by managed care organizations (MCOs) will gain the uptake in members and conversely conduit of business will translate into more patients for PBMs to service.

Biosimilar Drug Approval

Healthcare reform legislation included guidance on allowing biosimilars (rudimentarily defined as generic versions of biological therapies) into the U.S. market for the first time. Even though biosimilars will be less expensive than brand manufacturer versions, their prices will be still be well above average prescription costs and be used to treat advanced conditions. As biosimilars are injectable therapies for advanced patient needs, PBMs are the ideal entity to closely manage patients, prescriber activity and plan management. This includes patient support services, physician communications and other programs necessary to fortify strong uptake of a new product concept. As the leading PBMs have specialty pharmacy units, they are already setup to take on this new and upcoming pharmaceutical marketplace.

Formulary Contracting
PBMs are seasoned veterans in working with pharmaceutical companies and closely managing formularies. A cornerstone of healthcare reform is that people have access to affordable healthcare. There will be a strong focus on lowering drug costs through contracting and procurement measures. PBMs are well situated to bargain for favorable brand drug pricing, manage brand-to-brand or brand-to-generic interchanges through retail and mail order pharmacies, administer prior authorization requirements and other programs.

Extensive Data Management And Reporting Requirements

As more persons are enrolled in healthcare plans, the variety of patient types and associated costs will widen. Data management and reporting is critical to monitor finances, utilization, developing trends and outcomes. National and regional distribution of members and the variation of patient types are a risk management challenge which will require extensive updating/monitoring of data streams. The data that is cultivated by the PBMs will be extraordinarily valuable to clinicians, payers, marketers as well as state and local governments. PBMs can use the data to better manage their own member/patient customer base and use it to advance their own commercial interests. Outcomes monitoring will be paramount to better manage formularies and patients. Another segment seeking data will be those interested in preventing fraud, abuse and mismanagement within the programs by patients, pharmacists, physicians or plans.

Summary
Healthcare reform will cultivate widespread and ongoing change throughout the U.S. healthcare marketplace. Since their inception, PBMs have steadily evolved from basic claims processors for retail prescription plans prescriptions into pharmacy provider network management, developing their own brand/generic/multisource drug formularies, constructing mail order and specialty pharmacies, providing patient counseling, medication therapy management and an array of other services. Their ability to effectively manage care/cost considerations for clinical and payer interests has been well demonstrated and continues to expand and improve. There are some indications they may selectively begin to take on the management of the medical portion of healthcare benefits. Moving forward, PBMs will readily maneuver through the changes healthcare reform brings and be in favorable position to profitably grow into the future.

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