Plan sponsors are requiring more from their PBMs…. more service, more transparency, more cost reduction. What are the industry trends that will influence the PBM industry’s ability and willingness to deliver?  WBC, along with our subsidiary PharmaSeer, gazes into our crystal ball to predict what you can expect….

imageTop 10 Trends for 2010/2011 and Beyond:

1Value-Based Plan Design. For all Wellness and Population Health Management programs, compliance is the name of the game. Helping members stay compliant with drug therapies through the removal of potential barriers is how it’s done. Benefit designs that reduce or eliminate co-pays that may serve as a financial deterrent, as well as creative home delivery incentives and maintenance-at-retail options will prevail. Also, 4th and 5th tier plan designs will become commonplace.

2. Generic Utilization. Still the big enchilada of Rx cost-containment strategies. Profitable for the PBM, lowers cost to the plan sponsor and member.  What’s not to like?  Keep in mind that a plan sponsor needs to check to make sure that the PBMs efforts to drive home delivery generics do not create a higher net cost to the sponsor when compared to retail for certain drugs. Requiring the broadest MAC list, without allowing the PBM to switch lists at its discretion, and having it apply at both retail and mail is the way to slay.

3. Right-Sized Networks. A WBC-term that sounds so much better than “restricted.”  Do we really need 57,000+ stores to meet the needs of our members? In a word, no. Most groups will do just fine with a 30,000 store option and many can work with only 18,000 stores in the network. Plan sponsors can reduce their cost through better discounts and reduced net cost pricing by creating steerage to a directed network using a Walmart or Walgreen’s, as examples.

4. Restricted Formularies. Let’s call it “select formularies.” These are closed formularies that have been crafted based on a true net cost objective and evidence-based value, not for the purpose of generating rebates.

5. New Pricing Methodologies. The bell tolls for AWP! Let’s not lose the opportunity to create more transparent pricing as we move toward actual acquisition cost basis. In the interim, we’ll see more  AMP or WAC alternatives. This extends to pricing requirements for an all-inclusive generics option, so that the gaming of adjudicating at brand or non-MAC discounts is eliminated. Specialty will move toward ASP pricing.

6. Specialty Integration. Specialty continues to grow as a significant piece of the drug spend. Too often, a PBM account manager can’t answer client questions regarding specialty utilization due to lack of communication between operating groups. Cost savings can only occur through better unit cost discounts and therapy management. A recent study indicated that only 50% of self-funded employers have adopted a specialty drug strategy.

7Personalized Medicine. Genetic testing to determine which medication therapies have the best chance at improving a patient’s health status or controlling their disease state. Several PBMs are investing heavily is this arena.

8. Comparative Effectiveness Research. Does a new drug really work better or does it just cost a whole lot more?  This is the question to which  plan sponsors will demand an answer. Evaluating NNT (“Numbers Needed to Treat”) will make a resurgence amongst epidemiologists and will be introduced to employer plan sponsors.

9. “Follow-On” Biologics. Generic versions of expensive specialty drugs, sometimes referred to as “Biosimilars” or “Follow-On” Biologics, will push forward, at least as long as Rep. Henry Waxman stays in office. The EU has approved 10 biosimilars for use in Europe. The FDA will need to sign-off on a pathway for the approval process in the U.S.  Waxman’s H.R. 1427 will be resurrected this year.

10. Drug Importation. Another political football that seems to have public support. A trade-off of pharma’s endorsement for healthcare reform was for Washington to kibosh the importation initiative. We don’t expect it this year, but bet it will come to pass prior to 2012 election

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