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Analysis

HR Leaders Discuss Plan Design, Rebuilding Trust With PBMs

By Jack O'Brien  
   October 09, 2019

One major question facing PBMs is what role do these entities play in the larger scheme, especially as the healthcare industry gradually shifts towards value-based models. 

Editor's note: This article is based on a roundtable discussion report sponsored by Alluma Inc. The full report, Approaches to Navigating the Pharmacy Benefit Management Space, is available as a free download.

Pharmacy benefit managers (PBM) have grown significantly in the past few decades as prescription drug costs skyrocketed. The influence of PBMs, largely concentrated among three to five major players, has drawn scrutiny from provider organizations, drugmakers, and lawmakers.

Human resource (HR) executives at health systems and hospitals need to understand how to approach PBMs at the negotiating table to benefit their own organizations.

"I think being in the healthcare space, our health plans have some opportunity to drive some change based on plan design," says David Burrack, vice president of total rewards at OU Medicine, Inc. "We’re going to go back to each of them after we get through the pricing and high-level differences and ask, are smaller PBMs willing to manage the health plan design?"

"This includes allowing internal use of all pharmacies compared to their own pharmacies, allowing 340B pricing, allowing whatever plan design around disease management and provide them at the levels that the plan wants. What will differentiate PBMs is who is willing to do that, or [whether] we have to take their cookie-cutter approach."

One major question facing PBMs is what role do these entities play in the larger scheme, especially as the healthcare industry gradually shifts towards value-based models. 

"If the question is, 'What is the outlook for the PBMs?' it depends on what legislation is being passed," says Michelle Skipper, interim HR director at UCSF Benioff Children's Hospital Oakland. "It may be hard to pass legislation on a federal basis, but individual states may be able to draft legislation and impact change. Once one state implements change, others will follow. At that point it may be out of the PBMs’ hands, or even healthcare organizations, that they will be forced to do what is best for the consumer."

Some are less optimistic about the prospect of PBMs fitting into a value-based world. 

"I’d like to think that’s true. My concern is that the claims and rebate dollars right now involved in PBM are so huge that even if the government mandates price fixing, there likely will be alternative methods developed to leverage those dollars," says Jim Berg, vice president, PBM business development and client management at Alluma. "It’s hard to figure out a way where you can legislate your way out of all of that. We’ve had all these conversations over the last year or so that are focused on the PBM financial activity, and the piece that I keep getting struck with, that is not part of the conversation, is tied to the whole point for having a pharmacy benefit offering using a PBM’s services—which is to provide care for patients."

View the complete HealthLeaders Roundtable report: Approaches to Navigating the Pharmacy Benefit Management Space

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


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