Panelists at the Community Oncology Alliance Payer Exchange Summit argued that policy changes such as banning spread pricing and unbundling core issues are essential to reshaping the pharmacy benefit management (PBM) market and ensuring that resources invested in health care are returned to patients and providers.1
The panel discussed the possibility of direct contracts between employers and pharmaceutical companies as an alternative to the traditional PBM model, but also noted challenges in terms of administrative burden for employers. Two of the panelists, Fred Barton and Joseph Shields, represent PBMs that are trying to change public opinion about PBMs, which are often viewed as middlemen that limit physician choices and drive up costs for patients.2
A Biosimilars Council report evaluating IQVIA data found that PBM-orchestrated rebate schemes have discouraged biosimilar adoption and cost U.S. patients and payers $6 billion. | Image credit: MQ-Illustrations – stock.adobe.com
Additionally, a Biosimilars Council report evaluating IQVIA’s data found that PBM-orchestrated kickback schemes harm U.S. patients and payers. $6 billion By curbing the adoption of biosimilars.3
During the panel, Shields, managing director, founder and president of Transparency-Rx, a national coalition of transparent PBMs representing more than 60 companies, explained that transparency-first PBMs, which are often staffed by individuals from community and independent pharmacies, have long supported policies such as banning spread pricing and realigning resources to the benefit of patients and providers. Shields explained that misaligned financial incentives in the PBM marketplace prevent cost reductions, but transparent PBMs can reduce drug costs by 15% to 20%.
Next, Barton, vice president of clinical product partnerships at AffirmedRx, described the company’s mission to build a trusted PBM for employers. He highlighted the complexity of the PBM market and the need for a more direct approach. As public benefit corporations, PBMs like AffirmedRx put the public good over profits and aim to simplify pharmacy benefits to increase value for members, Barton said.
Mike Stancil, CEO of Pittsburgh Health Business Group, spoke about the potential of applying the public benefit corporation model to healthcare organizations. Stancil offered an employer’s perspective on navigating the complex PBM market and noted the disruptive potential of new PBMs. He explained how PBMs became the forces they are today, leaving no doubt that these organizations started with good intentions.
“I don’t think it was malicious from the start. Rather, I think it was a product of systems and heuristics – an attempt to solve a complex problem,” he said. “It’s like giving a slime mold a maze and then giving it food at the end. The slime mold navigates the maze and reinforces the path that leads directly to the food. Similarly, in the PBM field, as the industry developed, certain derivations turned into complex processes and wasted effort. Over time, they realized that these complexities allowed them to extract more from the system, so they maintained it.”
Stancil explained how these complex systems, which were originally a byproduct of efforts to address challenges in the PBM field, eventually became entrenched. Instead of streamlining processes, the complexity created an opportunity for increased revenue. As the systems evolved, PBMs became increasingly reliant on these complex structures to preserve and protect benefits. Now, employers who rely on PBM systems are tasked with navigating and remediating these complex arrangements, a responsibility that many feel overwhelmed by.
Stancil detailed the challenges employers face in meeting their fiduciary duties under the Consolidated Appropriations Act of 2021 and explained how a transparent PBM can help employers meet these responsibilities.
The conversation then shifted to the impact of transparency on drug costs. Legislative efforts were seen as essential to drive transparency and accountability in the PBM market. Panelists discussed how policy changes such as banning spread pricing and unbundling core issues could help reshape the PBM market. Shields expressed a sense of urgency for these legislative efforts, and panelists noted that policymakers need to act quickly before large PBMs adapt and maintain the status quo.
The conversation ranged to the challenges of achieving transparency in the PBM market. Barton highlighted the difficulty of educating employers and stressed the importance of policy reform. The panel discussed breaking up vertical integration and promoting competition to improve transparency.
The session also explored the future of the PBM market, with Barton discussing the possibility of employers seeking new PBMs and the need for collaboration and customized solutions. Stancil noted that direct contracts between employers and pharmaceutical companies are emerging as a solution, and emphasized the importance of allowing the market to find the best options.
Shields concluded: “We believe the market is fundamentally broken and that the industry needs to be restructured so that the resources invested in health care are actually returned to the people who provide it and who need it most: patients.”
References
1. Barton F, Okon T, Shields J, Stancil M. Breaking down the PBM black box and injecting transparency. Presented at: COA Payer Exchange Summit, September 9-10, 2024, Reston, VA.
2. Caffrey M. In July, PBMs find themselves in hot seat with the federal government. Evidence-Based Oncology. 2024;30(9):SP724. https://www.ajmc.com/view/in-july-pbms-find-themselves-in-the-federal-government-hot-seat
3. Jeremias S. Biosimilars Council: PBM rebate schemes cost Americans and payers $6 billion. Biosimilars Center®April 10, 2024. Accessed September 10, 2024. https://www.centerforbiosimilars.com/view/biosimilars-council-pbm-rebate-schemes-cost-americans-payers-6-billion
