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Minn-Pharma Collab | Pharmacists in Health Care Management

PAT GLEASON: Hello. My name is Pat Gleason. I'm a pharmacist and faculty member at the University of
Minnesota College of Pharmacy. My full-time job is working as the director of health outcomes,

a pharmacy benefit management company called Prime Therapeutics, headquarted in the

Twin Cities in Minnesota. Prime Therapeutics is a pharmacy benefit manager owned by Blue

Cross Blue Shield plans, including the Blue Cross Blue Shield of Minnesota plan.

Today I'm talking about pharmacist's health care management and the role of pharmacists in

health insurance. To begin with, I'd like to review health care benefits and in particular where

the dollars come from to pay the health care bills. The focus today is going to be on
employers. However, keep in mind that an individual can buy their health insurance from a

health insurer via the individual market as a result of the Affordable Care Act signed by
President Obama and some people refer to it as Obamacare.

Still most individuals in the United States are receiving their health insurance through their
employer or in the case the elderly through Medicare or the indigent or low income through
Medicaid. This presentation is going to focus mostly on employer purchased health insurance.

Who's paying, and in particular with the role as a pharmacist in health insurance pharmacy
benefit provided by employers.

So both employers and employees pay the costs for their health coverage, including that of
the prescriptions that they fill. Employers pay a premium to the health insurer to cover the

individual, their employee and then the employee's family members. And individuals pay a part
of that premium as well, and usually in a way of payroll reduction.

Employees also share in cost share when they are seen by a physician in a co-pay to the

doctor's office or when they pick up a prescription as a co-pay on that prescription. Another

form of an individual's cost share is in a deductible, in that they may have a fixed amount that
they need to pay out-of-pocket. We'll call it $1,000 in a calendar year, or their family or as an

individual and then their health insurance begins to pick up a portion of the costs. So there's

also deductibles.

In the history of health insurance, the term major medical or catastrophic reimbursement for

medical costs was used. In the '80s-- there was not really pharmacy benefit coverage up until
the 1980s for employees. There was this issue of just the major medical, and that would be
your hospitalization costs and maybe your outpatient doctor visits. But your pharmacy benefit

did not exist in the 1980s. And in the 1980s is when the employers began to offer pharmacy

benefit coverage as well, along with that major medical coverage.

So now what we have in today's health insurance world in America is term we use is health

insurance. And it's assume that that is covering your medical and pharmacy benefits. The term
health insurance does not generally refer to dental insurance or day care or sick pay or even

your 401 benefit you may receive, 401k retirement benefit you may receive from your

employer. Those are other benefits.

I was referring to the history and here's a slide about it. Pharmacy benefits were not included

in the major medical until the 1980s. And then what was major medical started to be called
health insurance, which is a combined medical and pharmacy benefit. And it coincided also

with the introduction of managed care plans or managed care insurers. And then the portion of

the managed care that the pharmacy management has generally been calls pharmacy benefit

management. And those companies that provide pharmacy benefit management are called

pharmacy benefit managers, or another term for them or acronym is PBMs.

And one of their big roles is claims processing. So instead of having received submitted on

paper to the insurer, the pharmacy benefit manager provides the electronic claims

adjudication process, contracts a network of pharmacies-- we'll call them Walgreens, CVS,

some of the major chains, Rite Aid, Target pharmacies which are now CVS pharmacies, and

then independent pharmacies and smaller. Thrifty White would be another upper Midwest, a
chain of pharmacies-- its a regional chain.

So the PBM will contract with those pharmacies, set up electronic communications so that the

pharmacies can submit their prescription claims to the PBM. The PBM will what they call

adjudicate the claim and inform instantaneously back to the pharmacy whether or not that

individual has insurance, say with the Blue Cross Blue Shield of Minnesota, and then what the

cost share is for the individual associated with that particular drug and then the amount being
expensed at the point of sale.

So no more paper claims then. There are limited restrictions. There were actually no co-pays

back in the early days. And the role of PBM was pretty much primarily administrative. There

wasn't a clinical tests of services or a cognitive test associated cognitive services provided by a

pharmacy benefit manager. That was in the early days of managed care and pharmacy
benefit managment.

And there are advances in pharmacy, in particular as the number of drugs and the research of

the number of FDA drugs approved, along with medical diagnoses become more accurate in

finding diseases and able to treat them then with medications leading to an unexpected

demand and increases in cost in particular for drugs. And managed care became more
involved in trying to improve the quality of the selection of medications to ensure that the right

medication is selected, that it's the safest medication to use, the most effective medication.

And also when those items have been identified in the selection of the safest, most effective

medication has been made, when there are many medications that are equally safe and

effective, say to treat a condition, when cost is considered, and managed care and pharmacy

managers put in place cost controls to insure the most cost-effective medication is be used for
the insured individuals. And people and insurers call those individuals that are members.

So the goals of managed care are to improve quality and reduce waste, create competition,

and then as a result of contractual competition between say, pharmacies that can provide the

services of dispensing medications in an area or region to contract with a limited number of

them and a limit the number of choices an individual may have who's insured for the policy
benefit to those pharmacies that offer the lower price in fees, at the best quality in order to

control health care costs and utilization.

In addition to that, they created formularies and preferred drug lists to differentiate the drugs

that were equally cost-effective, to put them into preferred agents and then creating cost-

shares for individuals to fill those prescriptions or obtain those medications, differentiating
preferred products from non-preferred products and putting differentials and cost-shares on

those products.

So pharmacies would sign up for the network at these fixed contractual rates. Services and

facilities then resulted in limited networks to try to reduce over-utilization and reduce costs. We
talked about member shares a second ago in terms of cost-share per episode per visitor

prescription. And then also managed care utilized published medical society guidelines, as well
as government guidelines to establish qualities of care.

The managed care entities will ensure providers are credentialed, they have degrees if they
say they do, they are certified to be specialists in areas like cardiology, radiology, and meeting

those criteria then provide a level of quality standards ensuring for their members that they're
paying the insurance bills. All these activities increased in volume and number over the course

of the 1980s and '90s through to today.

Some more particular to managed care pharmacy is are the tools that I was mentioning
earlier. Some of them I've provided here in more detail on this slide. Managed care pharmacy
tools included fix discounts, fees, and prices per medication that they've negotiated with the

pharmacies that would be dispensing them in the network. Plans allow only certain pharmacies
to be in the network that agree to these discounts, and fees.

The PBM began to limit the amount of medication that an individual can obtain from the
pharmacy for a period of time, limiting it to a 30-day supply. And over the last 10 years have

been developing a 90-day supply or what's been called extended day supply for chronic
medications for which individuals have been stabilized on a dose, so that an individual will

obtain three months worth of medication per a prescription fill instead of only one month,
thereby easing the burden of using a pharmacy on a monthly basis.

However, many medications that are for more acute problems a individual cannot obtain more
than a 30-day supply at a time. And that's a rule, a requirement that's put in place by the

managed care pharmacy. Also creating cost shares formularies which I mentioned a little bit
ago in an effort to establish a member share equaling out to about 20% for your traditional

kind of drugs including generics, which average about $20 a month in costs in 2015, branded
products which average about $250 a month in costs. So 20% of that cost is ranging around

$50 per month supply.

And then for specialty drugs are drugs that are injected to treat kind of more rare conditions

like multiple sclerosis or rheumatoid arthritis the cost share is not close to 20%. It's more about
2% because those specialty drugs on average cost about $5,000 a month now, or $60,000 a

year. And most benefits do not have a 20% cost coinsurance on that or 20% cost. It's more
along the lines of 2% of the $60,000 cost. So we're talking less than $1,000 of the portion of
the true cost of the drugs asked to be paid by an individual. And that's what insurance is

designed for, to prevent catastrophic costs to occur for an individual.

The fourth bullet point under managed care pharmacy tools here is establishing treatment
guidelines and protocols. And the PMB, the pharmacy benefit manage will establish and use

guidelines and treatment protocols usually through a prior authorization process to ensure that
the an individual does have a diagnosis of rheumatoid arthritis for example to continue that,
and that they are using and following the Medical College of Rheumatology's guidelines which

recommend a trial on a generic oral drug called methotrexate before moving on to these
expensive biologic anti-inflammatory agents to treat rheumatoid arthritis. For example, Enbrel

or brand name Humera. Enbrel's generic name is Etanercept and Humera's generic name is
Adalimumab.

Now moving to the unexpected results of managed care-- these co-pays hid the true cost
which I was just referring to, especially drugs Enbrel and Humira for example have true costs

that are around $50,000 to $60,000 a year in drug costs if someone was adherent in taking
the drug chronically for a year. We're talking $50,000 to $60,000 a year to treat someone with

Enbrel and Humira, yet the individual is paying less than $1,000.

So they're hiding the true cost of the medication, which may result in individuals wanting to use

Enbrel or Humira before methotrexate and not following the guidelines because they want to
use the newest, what they may consider the best products. Although that may simply be due

to direct to consumer advertising, which there is no direct to consumer advertising for

methotrexate yet there is for Enbrel and Humira.

So pharmacy benefit managers as we've been talking about, manage medication benefit
exclusively. They don't manage the medical benefit. They don't establish physical costs of

physician networks or hospital networks or hospital costs to be paid. They're paying for the
medications. There's a focus first on safety and efficacy of the medication and then on price,

delivery, and administration.

They process claims as I mentioned earlier. They contract with pharmacies. And then the build
a benefit design for the medication to save employers money and ensure medications are
used cost-effectively and safely.

So pharmacy benefits today-- employer-sponsored pharmacy benefits-- most employers offer

pharmacy benefit. I would say almost all. Over 90% of prescription coverage costs are paid for
by the employer. Approximately 10% are paid out of pocket as co-pays or cost-shares by an
individual or as part of a deductible. However pharmacy benefit costs are going up at quite a

dramatic rate at a double digit or more than 10% increase in pharmacy costs for the benefit for
the past three years annually. 10% increase each year has occurred for pharmacy benefits in

the United States for employer purchased pharmacy benefits.

A typical plan example here is shown. A member slash patient pays a share of the medication
cost to complete its fixed cost-share of say $10 for generics, $20 for brands. Sometimes
there's a list of preferred products, and there's a not covered, non-preferred product. That's

part of a potential a former benefit design. Also mail order pharmacies tend to have savings on
a unit cost basis of up to 10%. These limitations and restrictions are a burden individuals and

requires navigation and time investment of an individual or patient in order to follow the rules.
Sometimes it is not easy.

So pharmacy and health care benefits and the role of the pharmacist in the PBM-- this can be
thought of as activities or even potentially jobs i in a pharmacy benefit managing company.

Medication therapy management is required by Medicare. Much of medication therapy

management right now is done via telephone conversation. And that activity must be done by

a health care professional. Most typically it's done by a pharmacist. And pharmacy benefit
managers employ many pharmacists to provide this activity.

Pharmacy benefit managers and pharmacists design financial models for prescription
coverage, establishing co-pays, benefit limits, and incentives. Pharmacists working for

pharmacy benefit managers will treat patient education and material. They may provide
adherence counseling via telephone activity as well.

Pharmacists working for pharmacy benefit managers consult physicians frequently on the
phone, or face to face, using written communication, usually as a result of the prior
authorization or the request process or a medical policy review for coverage of medications, in

particular specialty medications like the Enbrel and Humira example that was given earlier. It
may require prior authorization before the medication be covered by insurance.

Pharmacists work in an development of claims processing and the technology, and information
services. And they're also managing clinical protocols to ensure medication use and safety. In
addition to that, as part of that process is the formulary process and the formulary
development and the clinical review and development and distillation of clinical information for

presentation to the pharmacy and therapeutics committee for decisions of formulary status of
medications.

So pharmacy and health care benefits and future roles for pharmacists, some considerations--
medications have become a target within health care, particularly due to their high cost of the
newer medications that are coming to market, for example for cancer or for hepatitis C, for
rare diseases. These drugs cost over $100,000 for a treatment course or just a $100,000
annually for the treatment of the drug cost.

Patients need to become more educated as consumers to make informed purchasing

decisions when drug costs are this expensive. They are a complex purchase. They're difficult
decisions to be made. And pharmacists can help navigate patients through these choices by
providing information through a number of venues.

In addition we have an aging population, which with age comes more disease and generally
more medication use. So we have increasing demand as well as increasing scenarios in which
an individual may be using many drugs or taking many drugs and the cocktail of these

medications need to be used safely. The potential for both disease drug interactions and drug-
drug interactions to occur where the role of the pharmacist is to ensure that there is no harm
from these medications as they are used and ensure that the medications are resulting in the
outcomes we are documenting to anticipate they provide, as well as if they're being as cost-

effectively as possible.

More on the future benefit in the management roles in managed care. It's kind of a general

kind of high level look at this. In managed health care at a macro level pharmacists are
involved in designing tools and providing patient content, reviewing medication products. As I
mentioned earlier about the formulary product reviews, they present their distillation of the
medical information for making decisions of drug coverage or formulary status.

And at a more micro level pharmacists are consulting with both prescribers, providers, and
patients, maybe performing chart reviews or medication, drug reviews or retrospective drug

utilization reviews. In addition to that they're providing medication therapy management

services to patients.

Pharmacists and assume the responsibility we hope, and that is a goal for the pharmacist to
assume responsibility for the medication outcomes. This is a medication knowledge service.
So a question for you as pharmacists, are you able to deliver good customer service? And
something that we as a pharmacy benefit manager, when we contract a pharmacy to be in the

network, we are assessing the capability of that pharmacy to provide good customer service
and medication therapy management services. And patients are your customer, so hopefully
you're answering the question, can you treat this person as a person and not the disease? So
people have diseases, but you're not treating diseases. We are treating people.

So as the pharmacy benefit management rules evolve, we as a pharmacy benefit

management in the company I work for, we're looking to hire individuals potentially on site, as

well as hire nurses and financial managers to help individuals understand their benefits. There
are online tools to connect patients to insurance and to make decisions.

Critical consulting services for patients are another opportunity. Clinical consulting to clinical
locations-- you're probably well aware that there are many clinics being run in pharmacies and
that service is developed by teams of individuals that include pharmacists working for
pharmacy chains and the health insurer pharmacy benefit manager see you as help. It's a

good example.

And then clinical consulting for distribution centers also occurs. A pharmacist has a role in

career opportunities in support mail order, regional dispensing and on-call support and
working in specialty pharmacies.

So in summary, you're well aware pharmaceuticals are playing an even greater and major role
in health care. There is a need for pharmacists and this in health insurance and pharmacy
benefit management services is going to increase. And I've described a variety of roles that
are available and will be available.