Employers would like to see changes spread to the business sector as prescription costs climb and other notes from around the interweb:

• Employers would like to see changes spread to the business sector as prescription costs climb. The cost of pharmaceuticals is a key topic for policymakers on the Hill, and it should come as no surprise that it’s also a major concern for employers across the country. The Business Group on Health released its annual survey of large employers this week and found that 91% are either concerned or genuinely very concerned about overall pharmacy cost trend. Alongside that finding, the survey identified that the median spending on pharmacy continues to grow, rising from 21% in 2021 to 24% in 2022. In addition, 92% said they were either concerned or very concerned about high-cost drugs coming through the pipeline. Specialty pharmacy accounts for a growing portion of health spend, and orphan drugs for rare, complex diseases account for large swaths of products coming to market.

• DOJ Generic Drug Price-Fixing Settlement. Teva Pharmaceuticals on Monday announced that it reached a deferred prosecution agreement with the U.S. Department of Justice over its drug price-fixing case involving generic drugs. Under the deferred prosecution agreement (DPA), Teva will pay a total of $225 million over a five-year period starting next year. From 2024 to 2027, the company will make $22.5 million tranches, culminating in a $135 million lump sum in 2028. Teva also agreed to divest one additional generic product to a third-party buyer. In return, the DPA will allow Teva to sidestep a mandatory exclusion from U.S. federal healthcare programs, which would have been the company’s punishment if the case had gone to trial, and it had been found guilty. In its news release, Teva pinned the drug price-fixing charges on a single former employee, who between 2013 and 2015 “agreed with competitors that Teva would not bid on an opportunity to supply that customer with a particular generic product.” As part of the agreement, the company has also committed to implementing and maintaining compliance controls to prevent such incidents from happening again.

• Playbook for Employers – Addressing PBM Misalignment. The guide, released by the National Alliance of Healthcare Purchaser Coalitions, identifies several key strategic recommendations that employers can adopt when looking to better navigate their relationship with PBMs. For one, the playbook recommends that employers find advisers that are genuinely putting in the work for them. Advisers should be independent and transparent, according to the guidebook, and contracts should be designed to ensure that PBMs act in the employer’s best interest. “As we uncover these increasingly apparent anomalies, I think we’ve got to challenge ourselves to do better and most importantly require that our advisers, our middlemen and our intermediaries do better on our behalf,” Mike Thompson, CEO of the alliance, told Fierce Healthcare.

• STAT News investigation takes deep dive into PBM broker conflicts of interest. Employers across the country — from big names like Boeing and UPS to local school systems — pay consulting firms to handle a straightforward task with their prescription drug coverage: Get the best deals possible, and make sure the industry’s middlemen, known as pharmacy benefit managers, aren’t ripping them off with unfair contracts. But a largely hidden flow of money between major consulting conglomerates and PBMs compromises that relationship, a STAT investigation shows. Some consulting firms often are getting paid more — a lot more — by the PBMs and health insurance carriers that they are supposed to scrutinize than by companies they are supposed to be looking out for.

In the complex world of healthcare, one aspect that often leaves both patients and healthcare providers frustrated is the prior authorization (PA) process, particularly in the realm of pharmacy benefits management (PBM). The term “prior authorization” refers to the practice of obtaining approval from a healthcare insurer or PBM before a prescribed medication or treatment can be covered by insurance. While the intention behind prior authorizations is to ensure appropriate and cost-effective care, the process has become a profit center, often favoring high-cost drugs over lower cost therapeutic equivalents or alternatives. In this article, we will delve into the intricacies of prior authorizations, discuss the role of electronic prior authorization (ePA) vendors, highlight common pitfalls, and explore ways to measure the effectiveness of this process.

Understanding the Prior Authorization Process

The prior authorization process begins when a healthcare provider prescribes a medication that falls under the coverage of the patient’s insurance plan. The provider submits a request to the PBM or insurer, providing information about the patient’s medical history, the prescribed medication, and the rationale for the treatment. The PBM then reviews the request to determine if the prescribed medication meets certain criteria for coverage, such as medical necessity, cost-effectiveness, and formulary compliance. If the PBM approves the request, the medication is covered by insurance. If not, the healthcare provider may need to explore alternative treatments or submit additional documentation to support the request.

The Role of Electronic Prior Authorization (ePA) Vendors

To streamline and expedite the prior authorization process, many healthcare organizations have turned to electronic prior authorization (ePA) vendors. These vendors provide digital platforms that enable healthcare providers to submit prior authorization requests electronically, reducing the reliance on paper-based forms and fax machines. ePA vendors also offer real-time communication between providers and PBMs, making it easier to track the status of requests and receive timely decisions.

CoverMyMeds, a leading electronic prior authorization (ePA) vendor, has grown to become one of the largest ePA platforms, serving as a bridge between healthcare providers, pharmacies, PBMs, and insurers. CoverMyMeds was acquired by McKesson Corporation in 2017. McKesson is a large healthcare services and pharmaceutical distribution company. Commonsense suggests drug wholesalers, like McKesson, want to get drugs out of their distribution centers as fast as possible. PA denials are inconsistent with drug wholesaler inventory turnover goals, for instance. Second to Optum’s acquisition of Change Healthcare, McKesson’s acquisition of CoverMyMeds is the largest conflict of interest in the pharmacy benefits management industry. The third most significant conflict of interest are non-fiduciary PBMs or their parent companies which own mail, retail and/or specialty pharmacies.

Common Pitfalls of the Prior Authorization Process

Despite the potential benefits of ePA vendors, the prior authorization process still faces several challenges. One of the most significant criticisms is the role of non-fiduciary PBMs. These PBMs are responsible for managing prescription drug benefits on behalf of insurers and employers, but they also have financial incentives that can conflict with patient care. Critics argue that non-fiduciary PBMs may prioritize revenue over cost-effectiveness, leading to low clinical value drug prior authorization (PA) approvals, for example. A “low clinical value” or LCV drug refers to a medication or treatment that provides limited or minimal therapeutic benefit to patients in relation to its cost, potential side effects, or overall impact on health outcomes.

Additionally, the PA process can be time-consuming for healthcare providers. The administrative burden of submitting requests, gathering documentation, and waiting for decisions can detract from valuable time that could be spent with patients. Delays in obtaining prior authorization can also lead to disruptions in treatment plans, affecting patient outcomes.

Measuring the Effectiveness of Prior Authorizations

To determine the effectiveness of the prior authorization process, several key metrics can be considered:

1. Timeliness: The time taken for a PBM to review and respond to a prior authorization request is a crucial factor. Delays in approvals can impact patient care, especially for acute conditions. Assuming all necessary documentation is received from a provider, 24 hours is a reasonable turnaround time for PA decisions.
2. Approval Rates: Measuring the percentage of prior authorization requests that are approved provides insights into the accessibility of both necessary and unnecessary treatments. PA approval rates greater than 70% signal rubberstamping. Cost-effective PA evaluation criteria must incorporate checks for lower cost therapeutic alternatives, FDA approved labeling, patient selection criteria, and clinical trial check points.
3. Appeal Rates: Tracking the number of appeals submitted by healthcare providers can indicate the level of dissatisfaction with prior authorization decisions. However, appeal approval rates above 70% signal rubberstamping especially when first and second level appeals are evaluated by the same PBM who stands to gain from LCV high-cost drug PA approvals.
4. Patient Outcomes: Monitoring patient outcomes after receiving treatments that required prior authorization can reveal whether the process affects health improvements. Medication Therapy Management (MTM) is a comprehensive approach to optimizing a patient’s medication regimen by ensuring safe, effective, and appropriate medication use, often involving pharmacist consultations and reviews of medication plans. It aims to improve patient outcomes and reduce medication-related problems.

Conclusion

A prior authorization (PA) is a well-intentioned mechanism to ensure cost-effective and appropriate healthcare. However, the process has become convoluted, and the involvement of non-fiduciary PBMs has raised concerns about potential conflicts of interest. The rise of electronic prior authorization vendors offers hope for a more streamlined process, but challenges persist. Prior authorizations are critical in utilization management programs yet plan sponsors and their advisors often take them for granted. The $50 fee per PA belies their impact on patient outcomes and costs for both members and the plan. A self-insured group with 2,500 members could easily achieve incremental savings of $500k annually with cost-effective PA and appeal processes alone.

As the healthcare industry continues to evolve, finding a balance between cost containment and patient-centered care will be essential. Whether through increased transparency, more standardized criteria, or a shift toward fiduciary PBMs, the goal should remain focused on delivering timely and cost-effective drug treatments to those in need.

The Transformation of Blue Shield of California’s Prescription Drug Model: What’s Behind It and other notes from around the interweb:

• The Transformation of Blue Shield of California’s Prescription Drug Model: What’s Behind It? Blue Shield of California is significantly reducing its partnership connections with CVS Caremark, while simultaneously welcoming four new collaborators to enhance its prescription drug benefits network. Among these new associates are Mark Cuban’s Cost Plus Drug Company and Amazon Pharmacy. According to Salina Wong, the Senior Director of Clinical Pharmacy Programs at Blue Shield of California, these shifts are essential to challenge the existing flawed system.

• Annual Report on Specialty Spend and Trends (2023). The seventh annual State of Specialty Spend and Trend Report uses integrated pharmacy and medical claims data to provide a holistic view of specialty drug spend and trends. First published in 2017, this report is the sole comprehensive analysis of specialty drug spending, powered by the industry’s leading integrated dataset through Artemetrx. Key takeaways include the percentage of members taking at least one specialty drug continues to rise (4%), while the average number of claims per person remains steady at 5 claims per year. Another key takeaway, specialty spend continues to shift from the medical benefit to the pharmacy benefit, the latter of which now accounts for 56.3% of spend.

• Playbook for Employers – Addressing PBM Misalignment. The guide, released by the National Alliance of Healthcare Purchaser Coalitions, identifies several key strategic recommendations that employers can adopt when looking to better navigate their relationship with PBMs. For one, the playbook recommends that employers find advisers that are genuinely putting in the work for them. Advisers should be independent and transparent, according to the guidebook, and contracts should be designed to ensure that PBMs act in the employer’s best interest. “As we uncover these increasingly apparent anomalies, I think we’ve got to challenge ourselves to do better and most importantly require that our advisers, our middlemen and our intermediaries do better on our behalf,” Mike Thompson, CEO of the alliance, told Fierce Healthcare.

• STAT News investigation takes deep dive into PBM broker conflicts of interest. Employers across the country — from big names like Boeing and UPS to local school systems — pay consulting firms to handle a straightforward task with their prescription drug coverage: Get the best deals possible, and make sure the industry’s middlemen, known as pharmacy benefit managers, aren’t ripping them off with unfair contracts. But a largely hidden flow of money between major consulting conglomerates and PBMs compromises that relationship, a STAT investigation shows. Some consulting firms often are getting paid more — a lot more — by the PBMs and health insurance carriers that they are supposed to scrutinize than by companies they are supposed to be looking out for.

As a CHRO or CFO on a buying committee, evaluating a pharmacy benefit manager (PBM) formulary is a critical task that requires careful consideration and attention to detail. Creating an effective PBM formulary requires expertise in the business of pharmacy benefits alongside clinician input. Here are ten key mistakes to avoid for enhanced patient care and cost savings:

1. Lack of Clinical Evidence: Failing to base formulary decisions on robust clinical evidence can lead to inappropriate or ineffective drug choices. Always ensure that formulary decisions are supported by reliable clinical data, including randomized controlled trials and meta-analyses.
2. Ignoring Comparative Effectiveness: Neglecting to compare the effectiveness of different drugs within the same therapeutic class can result in suboptimal drug choices and unnecessary costs. Always consider the relative efficacy and safety of available options.
3. Limited Stakeholder Involvement: Not involving key stakeholders, such as physicians, pharmacists, and plan administrators, in formulary decision-making can lead to poor acceptance and compliance with the formulary. Engage all relevant parties to gain valuable insights and perspectives.
4. Inadequate Consideration of Cost: Focusing solely on drug efficacy without considering the cost-effectiveness of treatments can lead to a formulary that is financially unsustainable for the PBM and its beneficiaries. Strive for a balance between clinical effectiveness and cost. For example, Fluoxetine 10 MG Capsules cost almost five times less than Fluoxetine 10 MG Tablets (see figure 1).

5. Omission of Essential Medications: Overlooking essential medications or therapeutic classes can limit patient access to necessary treatments and compromise their health outcomes. Ensure that a broad range of medications is available to meet patient needs.
6. Inconsistent Review Processes: Inconsistent or ad-hoc review processes can lead to inconsistent formulary decisions and a lack of transparency in the decision-making process. Establish clear and standardized criteria for formulary inclusion or exclusion.
7. Failure to Address Access and Equity: Not considering the impact of formulary decisions on patient access and health equity can lead to disparities in care. Account for patient demographics, disease prevalence, and healthcare disparities when designing the formulary. A cost-effective formulary can be constructed with as few as 1,250 products accounting for dose variations or formulations.
8. Insufficient Monitoring and Review: Neglecting to regularly monitor and reassess the formulary’s performance can lead to missed opportunities for improvement and adaptation to changing healthcare needs and advancements.
9. Inadequate Communication: Failing to communicate formulary changes effectively to prescribers, pharmacists, and patients can lead to confusion and disruptions in therapy. Implement clear and timely communication strategies to keep all stakeholders informed.
10. Conflict of Interest: Allowing conflicts of interest to influence formulary decisions can compromise the integrity and fairness of the process. Ensure that committee members disclose potential conflicts and establish mechanisms to address and manage these conflicts appropriately.

By avoiding these common mistakes and taking a comprehensive approach to formulary construction, you can be the impetus behind creating an effective PBM formulary. One that prioritizes patient care, cost-effectiveness, and clinical appropriateness.