Magazine article Drug Topics

Knotty Ties

Magazine article Drug Topics

Knotty Ties

Article excerpt

Good relations with PBMs start with 'full disclosure,' according to health plan pharmacy director

It was rare enough that pharmacy benefit management companies were the subject of a presentation at a hospital pharmacy meeting. But when two of the speakers at the presentation took aim at the "business practices" of some PBMs, it was enough for at least one member of the audience to cry "disservice to the thousands of very ethical, highly motivated, professional pharmacists working with PBMs."

Earlier, both Terrance Killilea, director of pharmacy for Regence BlueShield of Idaho in Lewiston, and Michael Deskin, president of the Pharmacy Benefit Management Institute in Scottsdale, Ariz., made it clear that they had not come to the ASHP Midyear Clinical Meeting last month in Las Vegas to chastise any single PBM. In fact, Killilea emphasized that there are "a lot of good PBMs" out there that do "an inherently honest business." Still, he said, there's "a lot of opportunity for monitoring PBM activities."

Since claims processing has become "a common commodity," PBMs are turning to other sources for income-namely, "manufacturer relations" in the form of formulary rebates and disease state management fees. This new emphasis "lends itself to some conflict" and can fly in the face of the goal of most health plans to provide "equal or better quality care while lowering or controlling cost," according to Killilea.

While formulary rebates "are a good part of business," they "must not be the final endpoint," he emphasized. Yet, that's what they have become at times. "In the worst-case scenario, PBM formularies push high-cost drugs, which are promoted to physicians to maximize rebates," said Killilea. He urged, instead, "a fine hybrid of pharmaceutical cost-containment and moderate rebates."

He also called for vigilance on the part of pharmacists who are not aware that their share of rebates may be shrinking. It used to be that PBMs would give pharmacies 80% of the rebates and keep 20%. The "new business practice" among some PBMs, explained Killilea, is "to garner some of that money before the rebate calculation is done"-for an "admin fee," or "formulary access fee," or something else. "If a customer is contracted for 80% of rebates, he should be receiving 80% of the rebates," he asserted.

What's needed, Killea continued, is "full disclosure, in terms of both contracting and periodic audits, if necessary. There's a veil of secrecy over formulary rebates that cannot persist in a healthy relationship." He prefers "drug-by-drug rebate reconciliation," even though he knows that "that drives certain PBMs crazy."

Deskin, meanwhile, cited several actions by PBMs that could have a major adverse impact on pharmacists and their patients along with health plan operators:

"Some PBMs are negotiating deep discounts with their pharmacies and negotiating whatever they can with their clients and keeping whatever difference is left after the claims processing is done. …

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