Category: Uncategorized

Down Under

When a pharmacy loses money on a drug because the PBM’s MAC price is below the pharmacy’s best available product acquisition cost, it is generally described as “underwater.” Often today, generic drugs see abrupt and unexpected price increases. These increases are sometimes unbelievable, with a product’s acquisition cost potentially increasing by hundreds of percent overnight. When this occurs, and the MAC price does not represent a reasonable acquisition cost, the pharmacy requests a MAC price review. In some states (like Iowa), the PBM has a finite amount of time (just a few days) to address the problem.

A person not familiar with the inner workings of a pharmacy might underestimate the significance of this issue. I thought it might be interesting to publish a few numbers from my Pharmacy Services Administrative Organization (PSAO). Any given drug product (with a unique NDC) can be underwater with one or more PBMs. Our PSAO, on behalf of all the pharmacies it represents, submits claims it deems significantly underwater to each PBM. Note that this does not represent all underwater claims, just those that lose a significant amount of money for a significant fraction of all of the pharmacies represented by the PSAO. In other words, the reported number below is on the low side.

By the Numbers

  • Underwater MACs reported to PBMs by our PSAO for 1 week: 5593
  • Responses received from PBMs (any response at all): 188
  • Responses that decreased the MAC price: 2
  • Responses that specified an increase the MAC price: 104*
  • Responses without specifying an increase: 82
*It should also be noted that an increase in MAC does not necessarily guarantee that the new price is actually profitable for the pharmacy.

The response rate for the week is about 3%, and is very disappointing. Pharmacies expect a better response rate from PBMs. Without an ability to act together, pharmacies are at the mercy of the PBMs to police their own MAC lists fairly.

About 2 years ago, many states began contemplating rules to regulate the PBM industry. In Iowa, these rules passed both the houses of the legislature unanimously. The rules, however were not sufficient, as they did not have significant consequences for the PBMs if they were non-comlpliant. Since that time, the rules in Iowa have been stiffened and several other states have added their own legislation. I am not aware, however, of any real positive outcomes from any of these State rules. The PBM industry continues to operate in a business as usual manner.

Unfortunately for pharmacists and pharmacies, the general public has difficult time comprehending the complicated relationship between the PBM industry and their pharmacy. Recently, however, there has been significant scrutiny from the US House of Representative and some media outlets on the business tactics of the PBM industry. The House Judiciary Committee Hearings shed some much needed light on the practices.

What is needed is federal rules to hold the PBM industry accountable, especially with respect to MAC pricing. These rules should be simple and the consequences for failing to abide to them should be significant. Rules might include:

  1. MAC price should be based on current, actual acquisition prices available to pharmacies in a given region. Prices should be updated daily.
  2. Contracts between PBMs and Pharmacies should be required to allow the pharmacy to make a reasonable profit. This means that either:
    • MAC price includes a real profit component that reflects the actual cost of dispensing in a region [1] or…
    • An additional professional fee for service be associated with each prescription claim. This is not the dispensing fee already being paid (ranging from as low as $0 to a high of $1.50).
  3. PBMs that also run pharmacies cannot give different contract terms to pharmacies they own or run.

States have found that consequences for non-compliance to be the problem with enforcing their rules: PBMs claim that that State rules don’t apply for Medicare Part D plans. By making federal rules regulating the PBM industry, this argument becomes moot. Consequences for non-compliance could, for example, put the PBM at risk of disqualification from future participation in Medicare Part D.

Pharmacy needs to come together and form a grass-roots campaign to bring PBM reform to congress. It will not be easy. The PBM industry has a lot of money and influence. Recent revelations during the House Judiciary Committee have given pharmacy an opening to press forward. Now is the time. Make your voice heard!

[1] Notes on the cost of dispensing: In the Iowa, the State Medicaid program leverages a state-wide survey of pharmacy expenses (essentially Profit / Loss balance sheets from pharmacies across the state are provided to a third party consultant firm) to determine the actual cost to dispense a prescription in the state. Currently, the fee paid by this program is $11.73/rx, which includes a margin for profit.

Limitations of Performance Measures

Medicare is gradually moving providers to a new, quality driven model.The current fee for service model used for so many years rewards providers for doing more: more procedures, more prescriptions, more admissions. The new quality model is designed to reward success. For example, fewer hospitalizations, fewer complications, or fewer adverse drug events.

One tool being used are the Star Measures released by Medicare. Many of these star measures are things that pharmacists can impact both directly or indirectly. Some of these have made their way into the EQuIPP measures now being used to provide pharmacies feedback on their quality.

Currently, pharmacies are not being assigned a star rating. Medicare Prescription drug plans (PDPs), however, are being assigned ratings, and these ratings come from the pharmacies in their network. The implication is that pharmacies that are hurting a plan’s star rating could potentially be terminated from their network.

The Pharmacy Quality Alliance (PQA), who manage the EQuIPP scores, sets pharmacy goals for each measure. These goals are revised every quarter. Pharmacies exceeding the goals set by PQA are helping the plan achieve a better score.  PQA also creates a “Top 20%” metric, allowing a pharmacy to benchmark themselves against all other pharmacies. Achieving a top 20% in even a single measure is non-trivial for most pharmacies.

Limitations

Make no mistake: the existence of the EQuIPP measures is a positive step in the transition of pharmacy toward the goal of increased quality. But like any program, there are some innate limitations to the current implementation of these measures. And while I fully expect these to be addressed as time passes, it is important to understand the current limitations.

The Current Measures are Surrogates

Currently, the measures being collected are not directly measuring quality or outcomes. Three of the measures are related to patient compliance–the percentage of days covered or PDC. It is easy to assume that better compliance will result in better outcomes, but the indirect measure makes many assumptions. There are dozens of reasons compliance might appear poor yet the patient actually is meeting their therapeutic goals.

Other measures make therapeutic assumptions. Should a patient with a risk of one disease be on a medication simply because the have another disease. The answer is maybe, but each case must be evaluated individually. One size does not fit all. High risk medications are another measure, and are equally challenging. Just because a medication is high risk does not mean that the patient’s outcomes will be worse on the medication than off of it.

The measures take this into account by setting the goals lower than 100%, but as will become evident below, this creates additional problems.

Limited Populations

The current measures represent only a fraction of Medicare Part D patients. With any statistic, a low sample size means that any change (adding or dropping one patient) can have a large impact on the measurement of a score. A store with 3000 total active patients might have as few as 20 Medicare patients fall into a measure group. Each patient effects the measure by 5%. The high side of the equation for a pharmacy of this size might only be 200 patients in a measure group. Over time, we expect more plans to add their data, which will help create more meaning full numbers. PQA reportedly takes this into account by not reporting scores for measure with very low population counts, though the scores are still calculated. I have one rural store with only 7 diabetic Medicare Part D patients represented. Our Performance score jumps around like popcorn every time it is updated.

Moving Target

PQA revises the 5 star goal numbers quarterly. This creates additional variability in a pharmacy’s scores. Undobtedly, the target scores will continue to rise with time, but there is a finite ceiling on the target. The closer the target score gets to 100% the more unrealistic the goal becomes.

Saturation

As time goes on, we would expect most, or even all pharmacies to meet the goals set for each measure set by PQA. At that time, the measure is essentially saturated. Either additional measures need to be added (making it more difficult to manage), the goals need to be increased (see above), or measures will be retired. Increasing the goal becomes problematic, as there will always be outliers, and as one approaches 100%, the goal becomes unrealistic: success becomes luck-of-the-draw. The option of retiring a measure is also problematic, as the success observed with time will simply trend back to baseline levels as pharmacies put emphasis on the new measure(s).

The Curve Effect

Imagine being a very bright student, at the top of your class. If you participate in a honors class filled with similarly gifted students, one would expect all students to perform well. Now imagine that class was graded on a curve: only the top 20% get an A. If the material is sufficiently challenging that achieving a score of 100% is not possible, then there are going to be a number of outstanding students receiving less than top marks in the class.

This is exactly what is starting to occur with several of the current measures. As pharmacies improve their patients’  compliance using a variety of techniques, the more and more pharmacies are reaching the 5 star level. Rewards for performance, however, are generally being tied to achieving a top 20% status. The curve is starting to compress. Increasing a pharmacy’s score on a measure only a fraction of a percent can lead to large jumps up the ladder toward the top 20%. The better everyone does, the harder it will be to achieve a top 20% rating. Like the case described in saturation above, success will eventually become luck-of-the draw.

The Long View

The current system of measures are a good start. With time, however, Medicare is going to have to revise the measures to better reflect outcomes. Additionally, the use of a top 20% metric for rewarding providers should be retired. Simple thresholds are more realistic. With time, quality measures will help pharmacy transition from a focus on product to a focus on care.

The King is Naked

In the children’s tale “The Emperor’s New Clothes” by Hans Christian Andersen, the King is duped by a tailor promising him a suit of material so fine that it is only visible to those worthy. As the King parades around the kingdom completely naked, most everyone is afraid to tell him about his mistake.

This tale, since translated into over 100 languages, tells story of a situation where no one believes, but everyone believes that everyone else believes. This idiom applies today as well as it did when the story was first published in 1837.

PBMs are simply middlemen. They don’t sell drug product. PBMs don’t see patients. They don’t provide patient care. What a PBM does do is quite simple: the PBM provides claim processing, providing service to both the pharmacy and the payor.

This started out as a per-claim fee pharmacies paid for processing. The payor would then pay the pharmacy. Today, the PBM is in the middle of the payment transaction as well. Besides charging the pharmacy for claims processing, the PBM now makes money on the very drug product they never purchase. They do this by charging the payor more for the drug than they pay the pharmacy. This trickery is called the spread.

By ingraining themselves so deeply into the produces, pharmacy benefit managers (PBMs) have duped Medicare and other Payors into buying an invisible suit. The PBM markets and sells a pharamacy network to the payor. PBMs make  promises to save the payor money by managing all aspects of the prescription benefit for the payor. This sounds reasonable, but over the last decade, PBM profits have steadily grown to tens of BILLIONS of dollars: the middleman is doing quite well. It is good to be the tailor to the King.

With PBM profits being so high, the the question needs to be asked: why has the cost of access to these networks become so high? The network of pharmacies offered by a PBM is certainly not exclusive. Most every pharmacy is a provider for multiple networks. And I have yet to see a pharmacy unwilling to provide care for a patient that is not in one of their networks. The “access” being sold is entirely artificial; an invisible suit sewn by the PBMs.

If a payor wanted to significantly cut its drug expenses, it would eliminate the spread pricing used by the PBM. The payor would demand price transparency. The price paid to the pharmacy would be the price the payor paid the PBM: the PBM would charge a simple fee for its service, just like it did in the beginning. This could save payors BILLIONS of dollars, benefiting even small payor organizations. The larger the payor, the more savings that could be realized by transparency. Medicare, the largest payor, could benefit significantly.

The truth is that the King is naked. It is time speak up and demand PBM transparency at a federal level.

 

Does Size Matter?

The other day, during a conversation I was involved in, an employee questioned the number of persons employees by small businesses in the United States. I recalled having heard that the number was significant and might even have been more than 50%.

When I was younger, I would have had to go to an encyclopedia to find the information, but today the answer is easily found using the Internet. As it turns out, I was fairly close. According to statistics taken from the most current US Census data, small businesses make up [1]:

  • 99.7 percent of U.S. employer firms
  • 64 percent of net new private-sector jobs
  • 49.2 percent of private-sector employment
  • 42.9 percent of private-sector payroll
  • 46 percent of private-sector output
  • 43 percent of high-tech employment

The origins of pharmacy are squarely rooted in the small business world. Back in the 1950’s, even small towns had one or more independent pharmacies. My own father-in-law, a long time pharmacist, regularly recounts more than a dozen pharmacies in our area, most of which resided downtown.

Mergers and Acquisitions

Over the years,  the number of small, independent pharmacies has decreased. Today, they are actually becoming rather rare in many areas of the country. Where once there were over a dozen in my area, today only a few continue to survive.

Chain stores with pharmacy departments have slowly taken the place of the neighborhood drug store. In fact, these chains routinely purchase and then close independent pharmacies to expand their own business. Rarely a month goes by that we don’t receive multiple inquiries asking if we want to sell our practice.

This merger and acquisition process is not limited to chain stores buying independent pharmacies, either. Recently, CVS purchased Target’s pharmacies [2]. In a response reminiscent of the cold war arms race, Walgreens is now looking to acquire Rite Aid [3]. This merger would combine the nation’s second and third largest chain stores, which would catapult Walgreens over CVS in number of stores.

Mergers have not been limited to pharmacies, either. The business of pharmacy involves pharmacy benefit managers (PBMs). A decade ago, dozens of national benefit managers serviced insurance companies and pharmacies. Today, however, the merger and acquisition bandwagon has left just 3 or 4 very large PBMs responsible for almost all prescription claims processing in the United States.

The Price of Big

If one goes back and compares small businesses to the much larger corporations, some things become very obvious. A Small business employs, on average only a few employees. Recall that almost half of all workers are employed by small businesses, and that small businesses represent 99.7% of all firms. By contrast, then, the remaining 0.3% are large firms who employ the other half of all workers.

These larger corporations have a some advantages over smaller businesses. They are capable of generating significantly more revenue than smaller companies. This gives these companies considerably more clout when it comes to politics, were money and influence go hand in hand. The proliferation of mega PBMs and Mega Chain Pharmacies, is in part, a power struggle.

But larger corporations also have weaknesses. The larger a company, the slower it is able to adapt to market conditions. Recently, an executive for a large company visited our store to evaluate one of our proprietary pieces of technology. The process of this evaluation has continued over many, many months, and we were becoming frustrated by the pace of the progress. The executive explained that his company was “like an aircraft carrier — taking several miles to make a turn.” Our small business, on the other hand, was essentially a jet ski running circles around them. The analogy makes a lot of sense.

What is the Goal?

The idea of four dollar generics did not come from independent pharmacies. This idea from larger companies was designed to loss-leader their pharmacy department to drive customers into their stores with the goal of making money on their other purchases. The loss-leader programs played into the PBM industry’s main tool: reducing drug costs. The PBMs used these programs to further push reimbursement for these products well below that four dollar level. Both large and small companies alike  continue to look for ways maximize efficiencies and reduce costs as reimbursement continues to plummet. Today, many products are being reimbursed at levels well below the cost to dispense them. This is not a sustainable goal.

Given the current emphasis on quality care at reduced costs, community pharmacists have been tasked to make sure that the patient achieves their therapeutic goals. The least expensive medication may not be the one that saves the health care system the most money. Pharmacy with an emphasis on patient care is increasingly being recognized for its ability to decrease total health spend. This is aligns well with the new goals Medicare and other payor are gradually adopting. Care is the new goal.

It will take a lot of effort for the large chains to turn their ships in this new direction. Without reimbursement for this professional service, however, the large ships have little incentive to change course. While small independent pharmacies can change course quickly, they are faced with an equally difficult challenge: with reimbursement levels now so anemic, sustaining a practice without other revenue streams is becoming near impossible. This pharmacy driven care initiative is in jeopardy. The jet skis can lead larger ships only if they continue to have fuel.

Congress needs to recognize the problem and take action. Congress needs to look past the large and powerful lobbies preaching savings from reducing drug cost. The real game is patient care. Congress needs to recognize the contributions made by pharmacists and allow them to be paid for these contributions. This is going to involve more than pharmacists receiving provider status under Medicare.

To make care a driving force, Medicare Part D plans must have a stake in the total health spend. This will force them to broaden their product-only strategy. Congress should reward the Part D plans for reducing Medicare’s health-spend, and the Part D plans should pay pharmacists for making this happen. A care-centered revenue stream is what pharmacy practice needs. This will also create the necessary incentive required to help the larger ships at sea to start their turns.

Pharmacists need to unite in a grass roots campaign to reform the system at the federal level. Now is the time. Make your voice count.

[1] https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf

[2] http://www.nytimes.com/2015/06/16/business/dealbook/cvs-agrees-to-buy-targets-pharmacy-business-for-1-9-billion.html

[3] http://money.cnn.com/2015/10/27/investing/walgreens-rite-aid-deal/

 

Don’t Get Caught By PBMs’ MAC Mousetraps (Repost)

The Thriving Pharmacist has spent some time in the past discussing MAC prices as they are applied to PBM-pharmacy contracts. The concept of MAC price, however, is also a tool used by the PBMs in their dealings with the payor. Despite being several years old, the article referenced below address how the PBM industry manipulates MAC prices on the payor side.

For an excellent explanation of MAC pricing from a Payor’s perspective, read Don’t Get Caught By PBMs’ MAC Mousetraps by Linda Cahn (ManagedCare September 2008)

“If it’s right for the patient, then its right for pharmacy”

“If it’s rights for the patient, then its right for pharmacy”.  I first heard this statement, or something very similar to this from an esteemed colleague, Bob Osterhaus.  Over the years, I have cited this statement in many venues convincing pharmacists to always put the patient first and do the “right thing” to ensure that they are achieving therapeutic outcomes through safe and effective medications.  This phrase was paramount to my business partner (Mike Deninger) and I as we re-engineered our practice to provide continuous medication monitoring (CMM) for all of our patients.   To put it simply, CMM was a process that we developed and implemented so that we became accountable to our patients.  Filling a prescription becomes more than just a dispensing process, but rather a meaningful encounter with the patient whereby pharmacists are reviewing the patients medications, identifying and resolving drug therapy problems, communicating with patients and prescribers, and documenting their activities in real time.  We firmly believed that this was the RIGHT thing to do for patients.

Since implementing CMM, our pharmacists have improved their efficiencies in their patient care processes so much so that we are documenting approximately 3000 interventions every month.  But how did we get there?  This did require an investment of time, money, and resources.  Early one Mike and I realized that CMM can only be done if there is an effective and efficient documentation system.  Initially we developed a documentation system that allowed pharmacist to do final verification along with patient SOAP notes and we called it our “Quick Clinical” system.  Eventually, it became a comprehensive documentation tool that allows our pharmacist to provide final verification, create on-the-run interventions, identify potential drug therapy problems, and write SOAP notes.  This clinical documentation system is now called PharmClin and we have filed for a patent to the United States Patent and Trademark Office (USPTO).  This system has allowed our pharmacists to better manage our patients drug therapy.  It was the RIGHT thing to do for our patients.

We also hired more pharmacists to ensure that we could provide other clinical services in addition to CMM.  These services include immunizations, medication therapy management (MTM), consulting services for hospice and long term care, medication adherence program (MAP), durable medical equipment (DME) consults, medication synchronization, and health screening/promotion.  We invested in technology (e.g. Parata Pass and Parata Max), participated in the new practice model (tech-check-tech program) initiated in our state, and fully engaged in medication synchronization with the sole purpose to make sure pharmacists were freed up to provide patient clinical services.  Although a sizable investment, it is the RIGHT thing to do for our patients.

Mike and I fully understand that we have a sizable financial investment in our pharmacies, but we firmly believe that we have put our pharmacy on the right path for a bright future.  It is not without concerns, fear, or doubts.  But then I am reminded of the statement by Bob Osterhaus “If it’s right for the patient, it’s right for pharmacy”.  Then I know that we have done the RIGHT thing because our patients are benefitting.

It is time for all of us to critically evaluate our practices to determine if we are doing the “RIGHT” things for our patients.  It begins by creating efficiencies in the practice so that pharmacists are freed up to provide clinical services.  Dispensing should be technician driven.  Medication synchronization services should be the standard of community pharmacy practice as it improves dispensing efficiencies, inventory management, and the provision of clinical services.  Pharmacists need to become “interventionist” by identifying drug therapy problems, providing clinical recommendations to patients and/or prescribers, and documenting their clinical activities.  Pharmacists need to make sure they are practicing to the level of their degree.  If they are uncomfortable and incapable of doing this, then they need remedial education/clinical training.  Obviously this is not easy, nor can it be done without some type of investment (time, money, or resources).  But, ultimately, it is not about what is best for us, but rather what is RIGHT for the patient!

The Tweeting, Thriving Pharmacist…

We often want to pass on things we find interesting that are not worthy of a full-length blog post. For that reason, we have added a Twitter account to the Thriving Pharmacist. Follow us at @ThrivingRPh (sorry, the full name doesn’t fit twitter’s guidelines).

We will, of course, also tweet each new blog post there, too. Twitter also enables each of you the ability to forward us possible topics or articles, as well as continue any discussions or questions about previous posts found on the blog. So all of you out there that use Twitter, consider following the @ThrivingRPh. Make every tweet count!

Who’s Paying Pharmacy to Resolve Insurance and PBM Issues?

Recently, I  spent over one hour to resolve an issue that should not have taken nearly as long as it did, nor should have been a problem from the start.  It had to do with a patient who needed blood glucose strips filled.  This patient uses an insulin pump, so she must check her blood sugars 7 times per day.  The patient’s physician had completed the prior authorization paper work and the patient did receive a letter from the PBM indicating that the strips had been approved for coverage.  And yet, when we went to fill the prescription, it got rejected because the product is an OTC.  The PBM was called and their representative basically read to me the rejection that I was already seeing on the computer screen.  So when I explained that the patient received a letter from them specifying that the strips are covered, the representative put me on hold and had to check her sources.  After some time had passed, the PBM representative came back on the phone to tell me that they cannot provide this override as it has to come from the plan because it is an OTC (Over the Counter) reject.  She then proceeded to tell me that I had to call the plan specifically as they would have to approve the override and she gave me the plan’s toll free number.  WHAT?!  The letter came from them (the PBM) to the patient, not from the plan!  The PBM representative insisted that this type of reject has to be overridden from the plan.  I repeatedly asked the PBM representative if the information on the strips could have been coded wrong, but she said, “No, it had to be overridden by the plan.”  So I proceeded to call the plan.

The plan representative was confused by my call.  She asked me if I had reached out to the PBM, and my answer was YES!  I told her what the PBM employee told me, and this just added confusion to the plan representative who said she would have to put me on-hold.  After some time she came back on the phone and she asked me to re-run the claim so she and another plan representative could see the reject.  Once I ran the claim, both representatives were now perplexed on why the claim would not go through.  The plan representative put me on-hold again and said she needed to do some more checking on why this claim was rejected.  After some time, someone at the plan hung up on me.   After some more time passed, I did get a call back from the plan representative who was very nice and helpful.  The plan representative informed me that the error was on the PBM side; they had coded the information incorrectly from the start.  Hmmmm!!! This is what I asked the PBM representative previously.  So either the PBM representative was lazy, misinformed, or not trained properly to check or identify if the transaction was miscoded.  Luckily, the plan representative was able to get into the PBMs system and make the necessary correction, and the claim did go through.

So, for those pharmacists who deal with these type of issues on a daily basis, they know exactly what I am talking about and the frustrations with these type of calls.  This happens way too often and provides no value to anyone. The complexities of the system created by the PBM are even beyond the PBM’s help desk employees, and even they could not help us correct the issue they created.  And who’s paying us to correct errors like this for them?  Community pharmacists are being bombarded with underwater MACs, DIR fees , clawbacks, and insufficient reimbursement for many medications.  And yet we are the ones who not only provide clinical services for our patients, but also resolve these claim processing errors.

If pharmacies are charged a fee by the PBM for each and every claim they submit to be processed, should not the PBM’s have to pay pharmacies for their work helping patients achieve their therapeutic outcomes–even if its to resolve processing errors made by the the PBM?  Indeed, if it were generally known how much time pharmacies spend working on PBM generated problems like this, they would likely be appalled. If the federal government has rules to reduce burdensome paperwork, should not the contracts signed by pharmacies (and on their behalf by their PSAO) have language that covers time wasted by the phararmacy on the behalf of the processor. In this case, a pharmacy technician would have cost the pharmacy about $30 in time. Where should we send the bill?

This is a open call out to all contracting organizations representing pharmacies (chain and independent). As our partners, stand up for us. Emphasize the value of pharmacies in assisting patients navigate the difficult world of the pharmacy benefit. Help the PBM industry respect our time and efforts. In the past, reimbursement for product helped offset pharmacy hours spent working these types of problems. Current reimbursement no longer allows pharmacy this luxury.

Remember, from the beginning, this was a clinical issue.  A patient with diabetes, with an insulin pump, requires testing above “normal” test strip usage.  All of the obstacles were administrative, and in no way helped the patient.  It took the pharmacist to uncover the convoluted mess created by administrative policy and clerical error.  It is always about the patient–let’s not forget this, and this needs to be emphasized to payers and PBMs!

Why PBMs May Become an Extinct Species

The PBM Industry

The Pharmacy Benefit Manager (PBM) industry has gone from being a claims processor (simplifying paying claims for the insurance payor) to a manager of the entire pharmacy benefit for hundreds of millions of patients. Is not uncommon for a PBM to tout the savings they garner the system thru their management of the drug formulary, restrictions on expensive medications, and a variety of processes that come close, or even cross the boundary, between the PBM being a “manager” and the PBM acting as a physician or pharmacist.

The PBM industry generally takes credit for saving the health care system billions of dollars yearly. But being a pharmacist, I often have wondered how much of these “savings” are due to the PBM itself, and how much is directly attributable to the actual care providers. I find it interesting that the PBM industry is a pure middle-man in the health care industry. As an industry, they have very little on the line as they are not generally responsible for the total health spend. Manufacturing savings for the PBM may be as simple as creating downward pressure on the price paid for product and services. The PBM can effect savings in this manner without actually jeopardizing their own bottom line significantly. While the above characterization is certainly not complete, it does represent the essence of the entire industry.

Quality emphasis

CMS and others are beginning recognize that the current system places too much emphasis on product and not enough on service. Recent initiatives are starting to emphasize quality of service in the equation, and these measures are NOT something that a manager can do themselves. They require the providers (and in this case these are pharmacists) to accomplish. Pharmacists are key because they actually can see, speak to, and evaluate the patient and their medication use. Recently, some PBMs have even taken steps in the right direction and initiated programs to reward pharmacies for high quality work. While these initiatives emphasize metrics that are simplistic (mostly measuring compliance), and the actual financial rewards are not at levels that could sustain high quality performance in a pharmacy, they are steps in the right direction.

Pharmacist Impact

Pharmacists can have significant impacts on savings in healthcare. Our own pilot study that included 600 patients with a local payor is showing significant savings effected by pharmacists acting as clinical interventionists. These savings, calculated by the payor using a rigorous statistical analysis, show that a pharmacy can save the health care system several thousand dollars per patient per year.

Now the US Army is reporting similar results; using pharmacists as interventionists can create significant savings and a positive return on investment. And this type of evaluation is starting to catch the eyes of payors. In Iowa, the payor involved in our pilot is looking to create a network of high performing pharmacies by next year (2016), and that network would be paid using a different model than the one currently used in the industry.

Changing Times

The current iteration of the Star Measures are simplistic, but they are a good starting point. We fully expect that the Star measures will evolve to include actual disease state outcomes and measures that better reflect the savings in total health spend. These changes are not compatible with the current PBM centered “manager” model. A PBM cannot manage patients in this manner, only a provider with face-to-face access to the patient can do this.

Increased emphasis on outcomes means that the PBM, who does not have any skin in the game currently, will either become less important, or will need to shoulder more responsibility for the outcomes of the patient. Either way, the days of easy profit as a middle-man may be numbered.  The current methods leveraged by the PBMs to create a stripped down model of pharmacy will not improve outcomes. The cheaper  drug does not necessarily mean better healthcare outcomes and a lower total healthcare spend.

These changes have significant implications to pharmacists and pharmacies that have adopted the stripped down model of pharmacy. Going forward, it will not be enough to simply fill a prescription. It is what is done after the prescription is filled, that time spent with the patient, that will become important. Pharmacists need to rediscover their inner clinician. Those skills learned in pharmacy school will need to be polished and practiced once again, for many, for the first time since graduating pharmacy school. Pharmacists need to start stepping up their games now. Start making every encounter with your patients count!

The Future

Imagine a future where it is the pharmacy that has negotiating power. A payor will negotiate with a high performing pharmacy to have them included in their network. Pharmacies and pharmacists are paid for the care they provide based on real clinical outcomes. Savigs effected by pharmacy and pharmacist are shared with the  pharmacy and pharmacist. A vision like this is possible, and it is a far cry from where pharmacy stands today, begging to be included in narrow networks with impossibly thin margins. In order to get there from here, pharmacists need to start now.