Purchaser Business Group on Health launches PBM

The Purchaser Business Group on Health launched a pharmacy benefit manager, the not-for-profit employer-led coalition announced Monday.

The PBM, which manages prescription drug benefits on behalf of payers, was born out of employers’ frustration as they have been denied access to information about drug costs, rebates and administrative fees, the Purchaser Business Group on Health said, which represents 40 large, private employers and public healthcare purchasers. EmsanaRx will be the first division of PBGH’s Emsana Health, an independent company tailored for large employers and their employees.

“Employers just want a formulary that is clinically appropriate and transparent. Those things don’t exist right now, which is surprising,” said Elizabeth Mitchell, president and CEO of Purchaser Business Group on Health and chair of the Emsana Health board. “This is a reflection of the frustration in the market—the incumbents have had the opportunity to make changes, they just haven’t.”

Business groups, doctors, pharmacists, patient advocates and insurers have been forming their own PBMs that aim to chip away at the 80% market share of CVS, Cigna’s Express Scripts and UnitedHealth Group’s OptumRx.

Mark Cuban, the owner of the Dallas Mavericks, also looks to curb healthcare spending and unnecessary utilization through an all-inclusive generic drug company. The Mark Cuban Cost Plus Drug Co. would combine manufacturing, distribution and pharmacy services, selling generic drugs at a fixed-rate markup.

PBMs develop and maintain lists, or formularies, of covered medications on behalf of health insurers. Some exclude less expensive generic drugs, which can steer patients toward branded drugs and increase out-of-pocket costs. They also use their purchasing power to negotiate rebates and discounts from manufacturers and contract with individual pharmacies to reimburse drugs dispensed to beneficiaries.

The big PBMs employ a spread pricing model, which critics argue favor high-priced drugs. The PBM charges a payer more than it reimburses the pharmacy for a certain drug and retains the difference. The benefit managers often receive rebates based on the manufacturer’s list price, which can incentivize the use of more expensive drugs.

It is unclear how much of the rebates PBMs give to pharmacies and how much is pocketed by PBMs.

“There’s an overall lack of transparency with the true costs in spread pricing,” said Lovisa Gustaffson, vice president of the Controlling Health Care Costs program at the Commonwealth Fund, noting that prices, rebates and administrative costs are often protected “trade secrets.” “Without transparency, you don’t know how much money they are making off of you.”

EmsanaRx will offer a fixed price per prescription. Pharmacists will work with employers to design their own pharmacy network and modify their formulary, said Greg Baker, a clinical pharmacist and CEO of EmsanaRx.

“We found that about 30% of a given population never uses their pharmacy benefit, which is where the per claim fee came from. If no prescriptions are coming through, we don’t get paid,” he said, adding that each contract will be auditable. “That per script fee is the same whether it is a $10 or $1,000 drug, so our incentive is to clinically do the right thing at the lowest net cost. We’re building a system that doesn’t create conflict that can lead to a bad clinical decision.”

While small PBMs may not have the same negotiating power, they can customize their offerings more than the large companies, Gustaffson said. They could save more by maximizing the use of biosimilars and generic drugs or streamlining the prior authorization process for certain products, she said.

It will be interesting to see if and how the Big Three PBMs respond to new competitors, Gustaffson said.

“Per-member-per-month drug costs are projected to keep going up, which concerns employers. They haven’t seen the solutions—not even the data and information—they have been asking for. They are just expected to pay the bill,” she said. “If there is this much interest from different organizations that are starting new PBMs, there has to be a market there.”

Source: modernhealthcare.com

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