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Pharmacy Benefit Managers Help Reduce Payer Drug Spending

Pharmacy benefit managers play a key role in improving a payer’s ability to satisfy patient needs and manage drug spending.

PBMs help payers save on drug costs

Source: Thinkstock

By Jesse Migneault

- Pharmacy benefit managers (PBMs) are instrumental in helping payers provide appropriate access to prescriptions, expand access, and rein in drug spending, according to a recent report from the Pharmaceutical Care Management Association (PCMA).

PBMs provide a variety of services, including accurate dispensing of medication, clinical support directly to patients and their caregivers, improving patient clinical outcomes, drug management, and safety monitoring through FDA-approved Risk Evaluation and Mitigation Strategy (REMS) programs.

"PBMs are able to simultaneously reduce costs and improve the quality of prescription drug benefits," said PCMA President and CEO Mark Merritt.

For payers and patients, the most challenging and costliest issue with prescriptions is the continual prominent use of specialty drugs.  With an increase in FDA approvals, the number and use of specialty drugs has only exacerbated the issue for payers.  Only two to five percent of patients use specialty drugs, but they swallow up a disproportionate share of prescription and medical charges.

According to PCMA, PBMs reduce drug costs by 30 percent for more than 266 million Americans enrolled in both public and private health plans, particularly Medicare Part D.

READ MORE: How Pharmacy Benefit Managers Could Reduce Drug Cost Growth

The PBM model in cost management for specialty drugs was developed over decades within the non-specialty drug market.  It includes practices such as formulary management, drug utilization review, prior authorization, step therapy, pharmacy network design, and site of care management programs. 

Two key ways PBMs work to reduce drug costs for payers is with robust support for development of generic and biosimilar drugs, and in the use of specialty pharmacies.  

The explosion of prices for specialty drugs has created panic among patients, who often depend on the lifesaving treatments.  The costs have also increased pressure among payers who are faced with the dilemma of paying the drug manufactures escalated prices or dropping coverage for the drug from their plans. 

PBMs have been instrumental in assisting payers to develop strategies that incorporated generics.  This included working alongside payers to negotiate discounts, promote fair competition, and provide advice on the efficacy and safety of generic pharmaceutical treatment.

Overall, the use of generics and biosimilars have managed to increase competition and lower costs. 

READ MORE: Rising Specialty Drug Prices Plague CMS, Medicare Beneficiaries

An active outreach and education approach to providers and patients by PBMs has resulted in 88 percent of prescriptions currently being filled by generic drugs. 

Across the industry there has been an average price reduction of 80–85 percent when compared to originator brand products, with annual generic drug savings estimated at $227 billion in 2015, according to the report.  

The regulatory fight to streamline the approvals of biosimilars continues.  Powerful pharma lobbying groups remain focused on blocking manufacturers of biosimilars, as the competition may result in billions of dollars in lost profits.

PMCA indicates in their research that similar savings may not be duplicated for biosimilars, but they do expect significant savings overall to be driven by the PBM model.

This pressure to manage costs while providing comprehensive drug benefits has led to a renewed push for generics and biosimilars to make it  to market.  

READ MORE: Prescription Drugs Account for 22% of Payer Premium Spending

The importance of specialty pharmacies within the PBM model have been instrumental in assisting payers with achieving better prices and drug management strategies.  The specialty pharmacies work with PBM’s to develop clinical dosage, prescription choice and the costs across both pharmacy and insurer benefit criteria. 

A specialty pharmacy, unlike a standard retail pharmacy, provides advanced handling and storage procedures.  It also staffs specialty medical personnel to help patients and providers navigate the patient’s drug benefit.

As stated in the report, a recent survey of payers by the PBM Institute (PBMI) found that payers report specialty pharmacies provide six times better unit prices than retail pharmacies.

The survey also found that payers reported that specialty pharmacies provided 17 times more superior clinical programs. 

The survey also showed twice the payer satisfaction with specialty pharmacies with their access to pharmacist services and copay assistance programs.

Future collaboration and increased integration between payers and PBMs was cited in the report as the future for effective drug cost management and patient care.

“Innovative strategies such as medical claims referencing and use of genomic and other advanced molecular diagnostics are enabling PBMs to ensure that patients receive targeted and cost-effective drug therapies.”

“With PBM’s being the primary source of information on specialty drugs they pledge to continue to strive to supply payers with information and access to reduce costs for drugs and the accompanying clinical services.” 

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