While vertical integration and consolidation within the U.S. health system has been a steady trend over the years, now we’re seeing it go even further with the creation of pharmacy benefit manager group purchasing organizations (PBM GPOs), which create yet another tollgate requiring payment in the drug therapy supply chain.
Approximately 80% of all prescription drug claims are managed by the top three PBMs: Express Scripts’ Ascent Health, OptumRx’s Emisar Pharmacy Solutions and CVS Caremark’s Zinc Health Services. Express Scripts, owned by Cigna, has set up Ascent in Switzerland. Ascent’s clients, in addition to Express Scripts and Cigna, include Kroger, Prime Therapeutics and Humana Commercial. Optum Rx, owned by UnitedHealthcare, has chosen Ireland as the headquarters for its GPO, Emisar. Zinc, the GPO created by CVS Health (which owns Aetna), is located within the U.S.
These PBMs are all called GPOs, but that’s where the similarity ends with traditional healthcare GPOs.
How Will PBM GPOs Impact Reimbursement and Formulary Decisions?
Traditional healthcare GPOs disclose administrative fee arrangements and report annually on the fees earned for each contract. Healthcare GPOs pass savings and rebates back to their customers. Exactly how the PBM GPOs will behave is yet to be seen.
With the creation of the PBM GPOs, the PBM is no longer contracting with the health plans but instead the health plans now contract with the PBM’s GPO (i.e., Ascent, Emisar, Zinc). Pharma companies are also now contracting with the PBM’s GPOs instead of contracting directly with the PBMs.
Pharma manufacturers often pay PBMs rebates in exchange for preferred formulary positions, such a tier placement or reduced utilization management requirements. With the vast majority of prescription drug claims being processed by only three PBMs, smaller and start-up pharma companies might have a difficult time contracting individually for a preferred formulary position and might need to consider aligning themselves with established pharma companies.
The Impact on PBM Reform and Patient Access
Many states have enacted various types of PBM reform: Laws limiting patient steering (in which PBMs direct patients to specific pharmacies), utilization management, spread pricing, transparency requirements and pharmacy auditing standards are among the issues that have pushed states to take action and drive reform. PBM reform can help improve patient access to therapy by reducing drug cost and eliminating mandatory use of PBM-owned mail-order, specialty and/or retail pharmacies.
With two of the three big PBM GPOs being headquartered overseas, there’s a real concern that PBM rebate reform will be sidestepped. And since GPO reform would also include non-PBM GPOs, this makes GPO reform highly unlikely.
Employers, government entities and family pharmacists have also voiced apprehension regarding the PBM GPOs. So far, very little has been made public regarding how these new entities will provide a benefit to the drug therapy supply chain or decrease the amount the public pays in prescription costs.
Maybe it’s the uncertainty that creates more fear than anything else. The hope is that these top PBMs will step up to the plate and provide the transparency that we need to make better, smarter healthcare decisions.