Magazine article Drug Topics

Cost Cause: PBMs Urged to Move to Integrated Approach

Magazine article Drug Topics

Cost Cause: PBMs Urged to Move to Integrated Approach

Article excerpt

PBMs urged to move to integrated

The long-term future of pharmacy benefit managers (PBMs) is in offering clients integrated health-care services that hold down total health-care costs and not in offering to simply hold down drug costs alone.

That was the word from several speakers at the annual conference of the American Managed Care Pharmacy Association, held in mid-October at Rancho Mirage, Calif. AMCPA represents managed care pharmacy organizations that typically have a mail-order component.

In the short-term, however, PBMs' "carve-out" approach to pharmacy benefit management, in which drug costs are a key focus, will continue to thrive, the speakers said. But, given competitive pressures, the margins are declining for doing business along drug cost lines alone.

Other insights from speakers at the annual conference included the following:

* Michael Barberi, principal at the consultant firm William M. Mercer Consultants, Morristown, N.J., argued that PBMs' future depends on their being able to provide a wider range of healthcare services than they offer now as "carve-out" drug benefit administrators. PBM services need to be integrated across a spectrum of different kinds of health plans available to payers, including health maintenance organizations, point-of-service plans, and indemnity plans.

* Donald Curry, v.p. of the new ventures division of Blue Cross & Blue Shield of New Jersey, predicted that reimbursement rates and margin levels in the PBM business will continue to shrink. "We are quickly approaching the commodities business," he said. "Per-member, per-month medical expense and administrative expense ratios drive the margins in the HMO industry."

* John Norris, president and CEO, National Pharmaceutical Council, pointed out that PBMs need to educate payers about how effective drug use impacts other health-care costs. …

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