Audio CD and written materials of AIS's audioconference on November 30, 2006

PBM Transparency: What Recent News Events Mean for Payers, PBMs and Other Stakeholders

Prefer a Written Report? Order the report based on the Nov. 30, 2006, audioconference. Buffeted by controversy and litigation, pharmacy benefit managers (PBMs) today face increasingly intense pressure to establish transparent business practices — a development that could lead to cost savings for payers, revenue losses for PBMs, and the establishment of a new competitive environment based on factors such as experience and the ability to influence drug utilization. Some observers say recent moves to establish full transparency in the industry could save pharmaceutical payers up to 6% on drug costs. Others contend PBMs will find new ways to make up for any lost profits, including by hiking administrative fees. What will recent developments mean for your bottom line? And what strategies can you adopt to make the impact as beneficial as possible?

Sponsored by Atlantic Information Services, Inc., publisher of Drug Benefit News, Specialty Pharmacy News and Managed Care Week

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The issue of PBM transparency, or lack thereof, has long been a sore point among payers and policymakers who contend that PBMs fail to pass along discounts they negotiate with drug makers. But pressure for change may have reached a critical mass this year.

Recent developments include URAC's release last month of draft standards for the industry's first PBM accreditation program, and the HR Policy Association's certification in July of 10 PBMs that agreed to meet or exceed HRPA's transparency contracting principles for large employers. Meanwhile, PBMs face intense federal scrutiny. Medco Health Solutions, Inc. in October entered a federal corporate integrity agreement, and paid $155 million to settle allegations that it solicited kickbacks from pharmaceutical firms to favor their drugs while paying kickbacks to health plans to obtain their business, among other things.

The movement toward greater transparency also is taking place against a backdrop of sweeping change throughout the entire pharmaceutical supply chain. New developments include Wal-Mart's decision to launch a $4 generics program — which some analysts say sets a transparent baseline for pricing on some generic drugs — as well as CVS Corp.'s move to purchase PBM giant Caremark Rx, Inc. for $21 billion, and First DataBank Inc.'s agreement to eventually stop publishing its list of average wholesale prices (AWPs) on drugs.

How can you best prepare for and take advantage of these trends in PBM transparency? What are the pitfalls you need to guard against? Three experts with different perspectives on the PBM industry share specific advice on how you can make sense of and best prepare for such fast-moving developments. Questions addressed in detail include:

Speakers

DAVID CLARK, vice president of medical and pharmacy services at The Regence Group, which serves roughly 3 million members of Blue Cross/Blue Shield plans in Oregon, Washington state, Utah and Idaho. The Regence Group also provides PBM support nationally through its RegenceRx subsidiary. Mr. Clark's responsibilities include overseeing all pharmacy-related services, including clinical evidence review of products, formulary activities, pharmacy and therapeutics committee, clinical services, contracting and benefit design. His responsibilities were recently expanded to include oversight of all medical operations, including disease management, care management, credentialing and appeals.

JOSEPH GIFFORD, M.D., chief medical officer at Regence Blue Shield. Dr. Gifford is responsible for cost and quality of health care services, including PBM services provided by RegenceRx, to 1.1 million members in Washington state. He has extensive experience in the information technology sector, as well as on both the provider and payer side of health care services. Prior to joining Regence BlueShield, Dr. Gifford co-founded a health care media software company and served in an Internet company spun off from Sun Microsystems. He was residency-trained in internal medicine at the University of Washington after receiving his M.D. degree from the University of California at San Diego.

TIM WATSON, Pharm.D., principal of Pharmaceutical Strategies Group. Dr. Watson has extensive experience in the pharmacy benefits arena, including management experience with several leading PBMs, consulting experience with Deloitte & Touche, and now as a principal and co-owner of a large pharmacy benefits consulting firm. He is a frequent contributor to leading trade journals, and is author of AIS's best selling book, "PBM Formulary Strategies and Their Impact on Payers," published in 2003. He has provided pharmacy consulting services to some of the largest employers and plan sponsors in the country. Dr. Watson received his Pharm.D. from the University of Arizona.

Moderator: Neal Learner, managing editor of AIS's Drug Benefit News and contributing editor of Managed Care Week.

 

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