Unbundling the PBM: New Approaches to Rx Spend Reduction

Medications are the number one category of employer spend, representing roughly 30% of the total cost of care and rising (1). That, in and of itself, is a tough pill for employers to swallow. However, the underlying factors driving this trend upward - mainly specialty utilization - are what really keep benefits leaders up at night.

Specialty medications alone are 20% of the total cost of care, but growing at 15-30% per year (2).

This is driven not only by the expensive price tag that specialty medications carry, but also by increasing utilization. There has been a whopping 400% increase in the amount of members taking specialty medications in the last 10 years (3).

That number is only expected to increase, as evidenced by the current drug pipeline.

CVS’ recent drug trend report highlights that 60%+ of new drug approvals are expected to be specialty medications and 70% of these new approvals are expected to be 1st line medications (4). As a result, members will be prescribed those medications as the first step in care.

To tackle rising pharmacy costs driven by these trends, employers are leveraging strategies like stop-loss insurance and delaying inclusion in formulary at launch. The Business Group on Health’s Plan Design Survey for 2021 highlights some of these strategies. Unfortunately, these strategies only attempt to mitigate the problem. They do not address the root of the problem: ineffective utilization management.

Unfortunately, in today’s business model, PBMs have limited incentive to curb specialty utilization trends, as they profit as spend increases.

Therefore, they are typically ineffective at guiding members to the optimal, lowest cost medications or helping them to get the best possible outcomes - let alone assessing if members are appropriately responding to the medications.

This is why some employers - Walmart, Boeing, and ArcBest - are exploring better ways to tackle pharmacy spend, including carving out pieces of the traditional PBM model.

Join us on May 4th at 2 pm ET at the Business Group on Health Annual Conference for “Innovation in Pharmacy Benefit Management: Unbundling the PBM”, sponsored by WithMe Health.

In this session, you’ll learn how leaders at Wal-Mart, Boeing, and ArcBest are approaching pharmacy benefits spend reduction with new approaches, including the exploration of pharmacy solutions outside of the traditional pharmacy benefit manager (PBM) umbrella and the unbundling of certain services.

Sources:

1) WithMe Health Claims Analysis; CVS 2019 Drug Trend Report; PSG 2020 Specialty Trend Report Includes pharmacy and medical benefit.

2) PSG 2019 Specialty Trend Report

3) PSG 2020 Specialty Trend Report

4) CVS 2019 Drug Trend Report