In response to rising costs for prescription drugs, Sree Chaguturu, M.D the chief medical officer for CVS Caremark made a rather bold statement. More specifically, to combat specialty drug costs, Dr. Chaguturu offered as the first option, “to combine coverage for all specialty medications—including those currently covered in the medical benefit—under the pharmacy benefit.” Say what?!
When I initially read this I about fell out of my chair. Once the shock wore off, I started thinking out loud why would Dr. Chaguturu write this? There is little to no chance the article was submitted without approval from the CEO if not the entire board of directors. So, what gives?
1) Is the article politically motivated?
2) Is CVS’s specialty pharmacy business under pressure by other externalities?
3) Is this a strategy to thwart Big 5 competitors who don’t own a chain pharmacy business?
4) All of the above?
5) None of the above?
Regardless of the motivation behind the statement, Dr. Chaguturu is 100% correct. However, it isn’t so simple moving medications to the pharmacy benefit. There are some distinct advantages beyond the obvious potential for realizing lowest net cost. Let’s take a look at UM or utilization management, for example. PBMs use utilization management programs to encourage the use of generics or preferred products. UM is the unsung hero of an efficiently run pharmacy benefits management program.
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UM programs include services such as prior authorization, drug utilization review (concurrent, retrospective, and prospective), quantity limits, refill to soon, and dose optimization just to name a few. PBMs have also developed specific edits for the senior population. These edits include identifying drugs that are not appropriate for a member’s age (e.g., oral contraceptives), or dosing regimens that are not adjusted for an elderly metabolism.
For employer-sponsored pharmacy benefit programs, there is gold in combining coverage for all specialty medications—including those currently covered in the medical benefit—under the pharmacy benefit. All it requires is sophistication and courage. Be advised there will be all sorts of naysayers who will advise against it.
Don’t listen to them. They either benefit from the status quo or aren’t sophisticated enough to help you navigate change. I would argue most of the innovation in health care comes from pharmaceuticals. They are the primary cost driver and will remain so for the foreseeable future. So, there are two options; get ahead of it or get left behind.