Changes in PBM Business Practices in 2019: True Innovation or More of the Same?

In 2019, pharmacy benefit managers (PBMs) responded to intense public criticism with business model changes described as movements toward full transparency and innovation to reduce costs for benefit plan sponsors. We critically analyze these changes in light of key challenges in specialty drug management: pharmaceutical manufacturer practices (price increases driven by coverage mandates and lack of price control, intensive and sometimes misleading advertising, patent extensions), FDA changes (increased reliance on manufacturer funding, weakened evidentiary base for drug approvals), and provider prescribing patterns (lag from evidence to routine practice, manufacturer influences on the knowledge base, direct manufacturer payments to frequent prescribers). The persistence of controversial PBM practices suggests that business model changes were mostly cosmetic, without altering key marketplace dysfunctions. Examples include "spread" pricing, in which PBMs pay pharmacies less than employer-paid amounts; rebate-influenced formulary development; and shifting of prescription volume to PBM-owned pharmacies. Spread in Medicaid was estimated at $224.8 million in Ohio and $123.5 million in Kentucky in 1-year periods and is the subject of an ongoing federal investigation. Rebate influence on formulary development is suggested by slow biosimilar adoption and a study documenting little association between brand exclusions and clinical or cost-effectiveness. Even in 100% passthrough arrangements, the price differential between rebated products and lower-cost alternatives may far exceed revenues returned to the payer. Shifting of business to PBM-owned pharmacies was identified in Florida managed Medicaid in 2018, where the state's 5 largest specialty pharmacies, all owned by managed care organizations or PBMs, collected 28% of prescription drug profit despite dispensing only 0.4% of claims. Finally, contract provisions and terms typically limit the ability of plan sponsors to monitor PBM performance. These include "offsetting," changes in definitions (e.g., "single-source generic") during the contract term, restrictions on audit rights, and exclusion of some pharmaceutical manufacturer revenues from "100%" passthroughs. We conclude that ostensibly positive changes in PBM practices have been offset by undisclosed business arrangements, shifts to alternative revenue sources, and opaque contractual terms. Establishing and maintaining a sustainable benefit will require fundamental alterations to this dysfunctional market DISCLOSURES: This work was funded solely by Archimedes, with no external funding. Motheral is the CEO of Archimedes, a specialty drug management company, and EpiphanyRx, a PBM that provides alternatives to the business models described in this article. Fairman is a consultant to Archimedes.

Telephone-based disease management: why it does not save money.

OBJECTIVES: To understand why the current telephone-based model of disease management (DM) does not provide cost savings and how DM can be retooled based on the best available evidence to deliver better value. STUDY DESIGN: Literature review. METHODS: The published peer-reviewed evaluations of DM and transitional care models from 1990 to 2010 were reviewed. Also examined was the cost-effectiveness literature on the treatment of chronic conditions that are commonly included in DM programs, including heart failure, diabetes mellitus, coronary artery disease, and asthma. RESULTS: First, transitional care models, which have historically been confused with commercial DM programs, can provide credible savings over a short period, rendering them low-hanging fruit for plan sponsors who desire real savings. Second, cost-effectiveness research has shown that the individual activities that constitute contemporary DM programs are not cost saving except for heart failure. Targeting of specific patients and activity combinations based on risk, actionability, treatment and program effectiveness, and costs will be necessary to deliver a cost-saving DM program, combined with an outreach model that brings vendors closer to the patient and physician. Barriers to this evidence-driven approach include resources required, marketability, and business model disruption. CONCLUSIONS: After a decade of market experimentation with limited success, new thinking is called for in the design of DM programs. A program design that is based on a cost-effectiveness approach, combined with greater program efficacy, will allow for the development of DM programs that are cost saving.

Pharmaceutical step-therapy interventions: a critical review of the literature.

BACKGROUND: Adoption of step therapy (ST) is quickly outpacing the market's understanding of its clinical, humanistic, and economic outcomes. The broad scope of previous reviews of drug management programs has prohibited an in-depth discussion of the ST literature specifically. OBJECTIVE: To conduct a critical review of ST program evaluations, discuss their policy implications, and provide recommendations for future research. METHODS: PubMed was searched for relevant English-language articles, and references of relevant articles were examined. The ST policy under evaluation had to require use of a first-line agent prior to coverage of a second-line agent. RESULTS: Fourteen evaluations of ST programs have been published, 7 in commercial populations and 7 in Medicaid. Twelve of the studies empirically examined claims data; 1 was a model; and 1 was limited to patient surveys. Five therapy classes, including antidepressants, antihypertensives, antipsychotics, nonsteroidal anti-inflammatory drugs (NSAIDs), and proton pump inhibitors (PPIs), have been evaluated. The research has consistently found statistically significant drug cost savings with the exception of antipsychotics, where rebates have frequently been excluded. Savings result from greater use of first-line medications and from reduced medication initiation, with the magnitude of noninitiation varying across therapy classes. Three studies have examined medication adherence, producing mixed results. Five studies have empirically examined the effect of ST on hospitalization and emergency room utilization and costs, with none finding statistically significantly higher disease-related utilization or spend, outside of higher outpatient expenditures but not higher outpatient utilization in 1 study. CONCLUSIONS: The research demonstrates that ST programs for therapy classes other than antipsychotics can provide significant drug savings through the greater use of lower-cost alternatives and, to a lesser extent, reduced drug utilization. The drug savings and clinical impact of ST for antipsychotics are unclear given the research conducted to date, but ST programs for NSAIDs and PPIs can provide significant drug savings without increasing use of other medical services. The research on ST shows gaps in the breadth of evaluation and methodological quality as well as possible study bias. Further research on ST is needed for other therapy classes and for the Medicare Part D population. Recommendations for other areas of research, needed methodological improvements, and reducing the potential for study bias are provided.

Clinical and financial outcomes associated with a proton pump inhibitor prior-authorization program in a Medicaid population.

OBJECTIVE: To examine the clinical and financial outcomes associated with a proton pump inhibitor (PPI) prior-authorization policy. STUDY DESIGN: Interrupted time-series analyses of antisecretory prescription drug claims. Separate 6-month retrospective cohort analyses were conducted to estimate the clinical and financial effects of the policy. PATIENTS AND METHODS: More than 1.2 million Medicaid enrollees, with subgroup analyses of 5965 continuously eligible, potential antisecretory medication users. Measures included antisecretory drug expenditures, proportions of patients with at least 1 gastrointestinal diagnosis and gastrointestinal-related ambulatory and inpatient medical service visit, and subsequent gastrointestinal-related and total medical service expenditures. RESULTS: There was a 90.9% decrease in PPI per-member-per-month expenditures and a 223.2% increase in histamine2-receptor antagonist (H2A) per-member-per-month expenditures in the month immediately following the implementation of the policy (P < .001 for both). A greater proportion (80.7%) of prior-authorization eligible enrollees who received a PPI had at least 1 diagnosis for a gastrointestinal condition than enrollees who received an H2A (64.1%) or no antisecretory drugs (48.4%) (P < .001 for both). Two-part, finite mixture regression analyses indicated that the enrollees who received an H2A or no antisecretory drugs were no more likely to have incurred greater total medical care expenditures than enrollees who received a PPI. CONCLUSION: Prior authorization for PPIs had the effect of reducing use of high-cost PPIs, while encouraging use of lower costing H2As without evidence of adverse medical consequences.

Randomized controlled trial of a dose consolidation program.

OBJECTIVE: To evaluate the effectiveness and financial impact of a drug dose consolidation (optimization) program using letter intervention. METHODS: This pilot program in a large, mid-Atlantic health plan utilized a randomized controlled trial research design. A review of adjudicated pharmacy claims records was performed monthly for 3 consecutive months from November 2002 through February 2003 to identify inefficient (i.e., >once-daily) regimens for any one of 68 dosage strengths of 37 single-source maintenance drugs with once-daily dosing recommendations. Prescribers who had prescribed one or more inefficient regimens were identified and randomized to one of the 2 intervention arms or a control arm. Prescribers in both intervention arms were sent personalized letters with information on their patients. inefficient regimens and suggested dose consolidation options. Patients of prescribers in one intervention arm received a complementary, patient-oriented letter. Pharmacy claims for patients in all arms were examined at 180 days after the date of the letter mailing for conversion to an efficient (once-daily) regimen. Financial modeling analysis calculated net savings as changes in pharmacy expenditures minus administrative costs. RESULTS: A total of 2,614 inefficient regimens, representing 6.7% of claims for the targeted medications, were identified. The rate of consolidation to a suggested dosing option was lower for the Physician Letter arm (7.3%) than for the Physician/Member Letter arm (10.2%) (P = 0.046). Both intervention arms had higher consolidation rates than the Control arm (3.9%) (P = 0.018 and P = 0.000, respectively.). Approximately 30% of the regimens in each study arm were never refilled after being targeted. Financial modeling indicated that a dose consolidation intervention could save 0.03 dollars to 0.07 dollars per member per month (PMPM) in 2003 dollars with full medication compliance but only 0.02 dollars to 0.03 dollars PMPM when savings were calculated with realistic, partial compliance rates. Subanalyses performed at the drug therapy class level revealed few opportunities to justify implementing a dose consolidation program. CONCLUSIONS: After taking into consideration program administrative costs, high rates of refill discontinuation, and dose consolidation that occurs naturally without intervention, the results indicated that a letter-based dose consolidation program did not appreciably decrease pharmacy expenditures.

Plan-sponsor savings and member experience with point-of-service prescription step therapy.

OBJECTIVE: To examine the effect of prescription step-therapy programs in terms of plan-sponsor savings and member experience at the point of service. STUDY DESIGN: Plan-sponsor savings were measured using a quasi-experimental, case-control design. Member experience with step therapy was measured using a self-administered mailed survey. METHODS: A 20,000-member plan implemented 3 step therapy programs in September 2002: proton pump inhibitors, selective serotonin reuptake inhibitors, and nonsteroidal anti-inflammatory drugs. Pharmacy claims from September 1, 2001, through June 30, 2003, were examined to compare changes in per-member-per-month (PMPM) net cost between the intervention group and a random sample of members from commercial plans without the step therapy programs. A mailed, self-administered survey was sent to members with a step edit from September 1, 2002 to December 31, 2002. RESULTS: The employer experienced a decrease of 0.83 dollars in net cost after implementing step therapy, while the comparison group had an upward trend of 0.10 dollars PMPM for these therapy classes. Member-reported outcomes indicated that approximately 30% of patients received a generic, 23% were granted a medical exception for the brand, 17% received no medication, and 16% paid the full retail price for the brand. If the pharmacist vs the patient contacted the physician, members were 8 times more likely to receive a medication covered by the health plan (OR, 8.10; 95% CI, 2.94-22.33 vs OR, 8.23; 95% CI, 3.11-21.93). Compared with those who received first-line therapy, those who paid out of pocket for the brand medication vs those who did not receive any medication were less likely to be satisfied with their pharmacy benefit (OR, 0.25; 95% CI, 0.08-0.80 vs OR, 0.12; 95% CI, 0.04-0.41). CONCLUSIONS: Step therapy produces significant drug savings. However, there appear to be opportunities to further members' and providers' understanding of these programs.

Health plan member experience with point-of-service prescription step therapy.

OBJECTIVE: To better understand health plan member experience with point-of-service prescription step-therapy edits and outcomes in terms of drug received. METHODS: Self-administered mailed surveys were sent to 1,000 members who experienced a step-therapy edit from September 1, 2002, through January 31, 2003, for proton pump inhibitors or nonsteroidal anti-inflammatory drugs. Based upon these findings, a second survey was conducted by telephone among 617 members who experienced a step-therapy edit from January through April 25, 2003, and who had no subsequent prescription claim for the drug therapy class associated with the edit. RESULTS: The mailed survey generated a 23% response rate, and the telephone survey generated a 33% response rate. Just over 66% of the mail survey respondents indicated that they contacted their physician directly to try to remedy the situation, while 40% indicated that their pharmacist contacted their physician. Forty-four (44%) percent of members indicated that they received a different medication than was originally prescribed, 15% obtained prior authorization for the brand medication, 11% received no medication, 11% paid full price for the branded medication, 8% got an over-the-counter medication, and 4% received samples from their physician. Approximately 7% sought other means of obtaining coverage (i.e., they used spouse.s insurance) or did not remember the outcome. Member and pharmacy contact with the physician significantly influenced whether the member obtained a medication covered by their health plan (odds ratio [OR] = 6.5; 95% confidence interval [95% CI], 2.76-15.12 and OR = 4.6; 95% CI, 1.96-10.60, respectively). In a separate survey conducted by telephone among a different group of members, insight into reasons why members did not obtain any medication was obtained. Using a closed-ended question, 12% (n = 25) of members indicated receiving no medication. Upon further questioning, however, 32% of those who indicated that they had not received a medication said that they had in fact received a medication to treat their condition some time after the step edit. The second most common reason for not receiving a medication included issues related to cost (i.e., willingness to pay) or affordability (16% and 28%, respectively). CONCLUSIONS: The results of this study suggest that a majority of members receive a medication covered by their health plan subsequent to rejection of a claim for a prescribed drug that is the target of a step-therapy edit. However, there are opportunities for better member and provider communication designed to increase the use of first-line drugs and reduce the number of members paying out-of-pocket or receiving no medication.

Predictors of satisfaction of health plan members with prescription drug benefits.

PURPOSE: Relationships between sociodemographic and health plan characteristics and health plan member satisfaction with prescription drug benefits were studied. METHODS: A survey was mailed in November 2002 to a stratified random sample of 14,141 people covered by a pharmacy benefit management company (PBM) who had made at least one prescription drug claim during the second quarter of 2002. Survey recipients had commercial health insurance and were 19-64 years of age. Participants were stratified by drug benefit plan design (two-tier copayment system, three-tier copayment system, coinsurance, or closed formulary). The survey contained 39 questions covering satisfaction with the prescription drug benefit, health-related attitudes and knowledge, and experience with the benefit. Predictors of satisfaction were examined by using logistic regression with probability weights. RESULTS: A total of 3819 surveys were returned (response rate, 27%). Respondents were more likely to be mail-order pharmacy users and less likely to be enrolled in a plan with a closed formulary. Out-of-pocket costs were viewed as the most important feature of the pharmacy benefit. In the logistic regression, higher copayments, coinsurance, closed formularies, intensive managed care, large health care premiums, a recent increase in copayments, and a recent denial of coverage were associated with lower satisfaction with the prescription drug benefit. Excellent health and use of mail-order pharmacy were associated with greater satisfaction. CONCLUSION: The extent to which health plan members served by a PBM had to share drug costs was the strongest determinant of satisfaction with the prescription drug benefit.

Trends in the use of antidepressants in a national sample of commercially insured pediatric patients, 1998 to 2002.

OBJECTIVE: The aim of this study was to estimate the prevalence of use of prescription antidepressants among children and adolescents by using nationwide data and to examine trends in use from 1998 to 2002. METHODS: Ambulatory prescription claims data for a nationwide random sample of more than 1.9 million life-years of commercially insured children (aged 18 years or younger) for the years 1998, 1999, 2000, 2001, and 2002 were examined retrospectively. The main outcome measure was trend in prevalence of antidepressant use. RESULTS: The overall prevalence of antidepressant use among children increased from 160 per 10000 (1.6 percent) in 1998 to 240 per 10000 (2.4 percent) in 2002, for an adjusted annual increase of 9.2 percent. The growth in the overall prevalence of antidepressant use was greater among girls (a 68 percent increase) than boys (a 34 percent increase). In 2002, antidepressant use was highest among girls aged 15 to 18 years, at 640 per 10000 (6.4 percent). The trend of increasing overall use of antidepressants among children and adolescents appears to have been driven primarily by greater use of selective serotonin reuptake inhibitors. CONCLUSIONS: The growth in the prevalence of use of antidepressant medications among youths appears to be continuing, and the rate of increase between 1998 and 2002 is similar to the rate of increase seen in the period of the second-generation antidepressants (late 1980s to mid-1990s).

Do decision-analytic models identify cost-effective treatments? A retrospective look at helicobacter pylori eradication.

BACKGROUND: Pharmacoeconomic models of Helicobacter (H) pylori eradication have been frequently cited but never validated. OBJECTIVE: Examine retrospectively whether H pylori pharmacoeconomic models direct decision makers to cost-effective therapeutic choices. METHODS: We first replicated and then validated 2 models, replacing model assumptions with empirical data from a multipayer claims database. Database subjects were 435 commercially insured U.S. patients treated with bismuthmetronidazole- tetracycline (BMT), proton pump inhibitor (PPI)-clarithromycin, or PPI-amoxicillin. Patients met >1 clinical requirement (ulcer disease, gastritis/duodenitis, stomach function disorder, abdominal pain, H pylori infection, endoscopy, or H pylori assay). Sensitivity analyses included only patients with ulcer diagnosis or gastrointestinal specialist care. Outcome measures were: (1) rates of eradication retreatment; (2) use of office visits, hospitalizations, endoscopies, and antisecretory medication; and (3) cost per effectively treated (nonretreated) patient. RESULTS: Model results overstated the cost-effectiveness of PPI-clarithromycin and underestimated the cost-effectiveness of BMT. Prior to empirical adjustment, costs per effectively treated patient were 1,001 US dollars, 980 US dollars, and 1,730 US dollars for BMT, PPIclarithromycin, and PPI-amoxicillin, respectively. Estimates after adjustment were US dollars for BMT, 1,118 US dollars for PPI-clarithromycin, and 1,131 US dollars for PPI-amoxicillin. Key model assumptions that proved retrospectively incorrect were largely unsupported by either empirical evidence or systematic assessment of expert opinion. CONCLUSIONS: Organizations with access to medical and pharmacy claims databases should test key assumptions of influential models to determine their validity. Journal peer-review processes should pay particular attention to the basis of model assumptions.

Geographic variation in the prevalence of stimulant medication use among children 5 to 14 years old: results from a commercially insured US sample.

OBJECTIVE: The purpose of this study was to evaluate geographic variation in the prevalence of prescription stimulant use and predictors of use among a nationally representative, commercially insured population 5 to 14 years old. METHODS: Prescription claims activity from January 1, 1999 through December 31, 1999 for a continuously eligible population 5 to 14 years old was evaluated. Age-gender adjusted prevalence rates were estimated for each state. Multivariate logistic regression using hierarchical linear modeling was used to evaluate the impact of age, gender, number of child dependents, and region of the country on stimulant prevalence. The contextual effects of urban or rural residence, median income, percent white, and physician rate per 100 000 residents were also controlled for. RESULTS: The 1-year prevalence of stimulant treatment for the entire study sample was 4.2%. Multivariate logistic regression indicated that stimulant prescription use was positively associated with age, male gender, fewer child dependents, living in higher income communities, and living in communities with greater percent white. Compared with children living in the Western region of the country, children living in the Midwest and South were 1.55 (99% confidence interval: 1.28-1.87) and 1.71 (99% confidence interval: 1.42-2.06) times more likely to consume at least 1 stimulant medication, respectively. Differences in stimulant prevalence across urban and rural residence were also noted. CONCLUSIONS: Geographic variation in the prevalence of stimulant use exists nationally, despite controlling for important predictors of use including age and gender. Possible reasons for the variation are discussed as are calls for additional research.

Retrospective, long-term follow-up study of the effect of a three-tier prescription drug copayment system on pharmaceutical and other medical utilization and costs.

BACKGROUND: Previous research has suggested that 3-tier prescription drug copayment systems produce drug cost savings without affecting the use of other medical services during the first 12 months after implementation. Assessment of such systems with a longer follow-up period has been needed. OBJECTIVE: This study examined the effect of a 3-tier copayment system on pharmaceutical and medical utilization and cost for 30 months after implementation in a population of commercially insured, preferred-provider organization members. METHODS: This was a quasi-experimental, pre-post with comparison group design that gathered data retrospectively from the claims database of a preferred-provider organization in the Midwestern United States. The intervention group comprised members whose employer switched from a 2-tier (generic/brand copayment) plan to a 3-tier (generic/formulary/nonformulary) plan. The comparison group comprised members whose employer retained the 2-tier plan. Employers did not offer a choice between the 2- and 3-tier plans. Outcome measures included total drug cost; net insurer cost (drug cost minus copayment); number of prescription claims; numbers of office visits, inpatient hospitalizations, and emergency department visits; and rates of continuation with chronic medication therapy. RESULTS: Relative to the comparison group (n=4132), the intervention group (n=3577) showed reduced growth in net cost and lower utilization of third-tier (nonformulary) medications (P<0.001 and P<0.01, respectively). The intervention and comparison groups did not differ significantly with respect to numbers of office visits, emergency department visits, or inpatient hospitalizations. Medication continuation rates were lower for the intervention than the comparison group at 6 months for oral contraceptives (P<0.05), but chronic medication therapy continuation rates did not differ significantly at any other time point or for estrogens, antihypertensives, or antihyperlipidemics. CONCLUSION: In the population studied, previous research findings were confirmed over a longer time period.

Use of chronic medications among a large, commercially-insured US population.

PURPOSE: To examine use of chronic therapies by females and males of all ages. METHODS: Participants were 1,295,948 members of a large US pharmacy benefit manager. The use of chronic medications by males and females during 1999 was examined overall and within 16 commonly-used chronic drug groups. Dependent variables were use of a drug group, number of drug groups used, number of prescriptions filled and sum of costs, both within each drug group and overall. Combination therapy was defined as using at least two of the 16 chronic therapy groups during 1999. RESULTS: Females were more likely than males to use chronic medications during the study year (36.5 vs. 22.4%, p < 0.001). Generally, the likelihood of using a chronic medication increased with age for both sexes. Commonly-used chronic medications accounted for 54 and 50% of prescriptions for females and males respectively, and for 53% of total drug costs for both sexes. There were few meaningful sex differences in the likelihood of using particular drug groups. Of those who took chronic drugs 14% used combination chronic therapy. CONCLUSIONS: This study provides demographic information regarding treatment of chronic conditions that can be used to aid policy decisions and to provide an impetus for future research.

Gender- and age-related prescription drug use patterns.

OBJECTIVE: To report the top 15 prescription drug categories used by males and females of all ages and to compare this information with national prevalence data. METHODS: Data used were pharmacy claim and eligibility information over the period January 1, 1999, through December 31, 1999, for 1,294,295 members of a large pharmacy benefit manager. Participant ages ranged from 1 to more than 100 years. Each participant was assigned to 1 of 9 age categories. Use of a drug category was defined as filling at least 1 prescription for a medication in that category during the study year. The percentage of males and females that used each drug group was established, and the 15 drug groups used most frequently were reported for each age category. RESULTS: Most gender differences in medication use appear after or around the puberty years. Women are more likely to use several classes of medications, including antidepressants and antianxiety and pain medications. Except for diuretics, men use cardiovascular medications at an earlier age than do women. The use of medications for chronic conditions increases with older age categories for both genders. The use of female hormones represents only a small proportion of the difference in medication use between genders. CONCLUSIONS: Analysis of data from the epidemiologic literature suggests that the gender differences in medication use shown in this study generally are to be expected.