Pharmacy benefits managers to play growing role in boosting outcomes, addressing costs

Bob Carter | April 30, 2018

Health-care costs are projected to increase a whopping 130 per cent over the next eight years after a period of relatively flat growth, according to a study published by Mercer in 2017. One of the key drivers is rising drug costs, with expensive specialty medications and gene therapies making up the majority of new products in development. So what are plan sponsors to do?

One trend predicted in the study is a defined contribution approach to health benefits. If plan sponsors apply the approach, which has been common in the area of  group pension and retirement savings, to health benefits, plan sponsors would insure drugs, life and disability benefits and provide cash allowances to cover non-drug services like paramedical, dental and vision care.

Read: Shift towards DC approach to health benefits inevitable

If the trend becomes the norm, two things will be critical. It will be important to manage insured drug plans to deliver maximum health outcomes, and plan members must learn to make better decisions about their spending on elective benefits. The focus for carriers would be on finding greater efficiencies for managing the defined contribution portions of the plan and engaging with their pharmacy benefits managers to protect all plan stakeholders from the high costs and risk associated with drug benefits.

As the pricing and funding model changes to accommodate the defined contribution trend, advisors will need to pay more attention to the pharmacy benefits managers that are under contract with their carrier to ensure the best match for their clients. Plan sponsors will need to rely on their advisors to be sure they consider group demographics and prescription drug experience. It will be important, then, to select pharmacy benefits managers that offer more evolved services to deliver better health outcomes.

It’s important to note that Canada is very well served by a number of pharmacy benefits managers that can all adjudicate claims. Pay-direct drug cards are the tools used to execute the science behind modern-day drug adjudication. In this way, it’s possible to avoid drug conflicts and early refills.

Surprisingly, there are still plan sponsors today that choose not to offer pay-direct drug cards, believing they can save costs if members fail to submit all of their drug claims for reimbursement. That mindset can actually result in higher potential costs and poorer health outcomes for members, as they lose out on the power of today’s advanced real-time adjudication.

Read: Deeper dive into cost projections nets big savings for benefits plan

At the same time, all pharmacy benefits managers maintain detailed records. They’re also able to analyze their data, identify trends and opportunities and make recommendations. The key is to spot opportunities and make recommendations in real time. However, the challenge is to engage plan members. Plan sponsors need to embrace the opportunities that come with a new level of connection and encourage members to consent to such relationships.

One example of such actively engaged relationships is where plan members sign up for a central dispensing pharmacy program sponsored or run by a pharmacy benefits manager. Such programs, which follow a home-delivery model, drive savings by working with plan members to change purchasing behaviours. For example, once they’re stable on their medication, they could receive a lengthier supply (such as 90 days), which reduces dispensing fees. Also, it’s possible to ship plan members generic drugs instead of a prescribed brand-name medication, where appropriate. Such changes in behaviour bring long-term cost savings to the plan with little or no disruption.

In more highly evolved, central dispensing models, plan members consent to the program’s pharmacy benefits manager calling on doctor to discuss they drugs prescribed and explore opportunities for more appropriate or cost-efficient alternatives. With that consent, the pharmacy benefits manager can also look for better pharmacological solutions, such as therapeutic substitution (with another equally effective but less costly drug), and suggest compatible and complementary treatments, such as vitamin supplements to make a particular medication more effective. In that way, the doctor, plan member, plan sponsor and pharmacy benefits manager can work together as a team to ensure they’re taking full advantage of the cost savings offered through drug manufacturers and provincial specialty drug plans.

Read:  ‘The sky is not falling’ on drug costs

One area where it’s even more critical for pharmacy benefits managers, carriers, plan sponsors and members to work as a team is managing complex diseases. They often require the use of specialty drugs and outside case management, so co-ordination and communication are vital. There are several such programs in the market today for managing diabetes and autoimmune conditions, such as rheumatoid arthritis, Crohn’s disease and colitis. Effective management must focus on all key factors — not just adherence but ensuring the prescribed treatment protocol is appropriate for the intended results.

In March, a report by Dr. Heather Ross, scientific lead of the clinical program at the Ted Rogers Centre for Heart Research, cited recent success using devices implanted in patients’ lungs that send information to their smartphones. Patients and their cardiologists were able to use the information to monitor progress and consider changes to treatment, as needed, for the best health outcomes.

Similarly, the Diabeter clinic in the Netherlands released a report about a self-adjusting artificial intelligence platform called Rhythm. The system has shown promise in decreasing the number and severity of hypoglycemic episodes, which may mitigate the number of hospitalizations and patient deaths.

Imagine the power of combining those complementary technology platforms with pharmacy benefits managers’ systems, pharmacist support and cost-control measures.

Read: Drug Plan Trends Report: A snapshot of what’s coming down the pike

Pharmacy benefits managers with existing diabetes management programs may have a leg up in bringing this next-generation vision to market. However, given the systems and platforms required to co-ordinate the various technologies, such as implants, artificial intelligence, smartphones and wearable devices, the work will likely be — at least in the near term — the exclusive territory of only the largest and best capitalized pharmacy benefits managers.

The bottom line is that finding the right pharmacy benefits manager may become the single most important task for plan sponsors in the years to come. When it comes to managing drug plans, the pharmacy benefits managers that offer the broadest menu of services will be best able to co-ordinate and unite all plan stakeholders. Those focused on promoting the best health outcomes will help benefits plans generate cost savings and end up being the pharmacy benefits manager of choice.

Bob Carter is regional vice-president, sales — specialty programs at Empire Life. These are the views of the author and not necessarily those of Benefits Canada or Empire Life.

Copyright © 2018 Transcontinental Media G.P. Originally published on

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