August 17, 2021 - 518 views|
Here’s how to assess the latest moves by healthcare giants to lower Rx spend, and some actions payers can take now to control drug spending.
Can health payers improve member experiences and increase access to care by lowering prescription drug prices? Five Blues plans hope so. In June, they announced the launch of Evio, whose goal is to “change the trajectory” of pharmaceutical pricing. The for-profit company plans to leverage depersonalized aggregated data from 20 million Blues members to measure the effectiveness of prescription drugs, thus arming payers with negotiating power with drug makers.
In a similarly motivated move, Anthem and Humana have invested almost $140 million into a new pharmacy benefit manager (PBM), called DomaniRx. Eighty percent owned by fintech SS&C Technologies, DomaniRx will combine that company’s claims processing platform with analytics to give payers more transparency into their drug costs.
Both efforts reflect steadily growing pressure from employers, consumers and regulators to control their Rx spend. The question prospective customers of Evio and DomaniRx should ask is whether these ventures offer significant new value or just simplify the complex relationships among health plans, PBMs, pharmaceutical manufacturers and patients.
Here are some factors to consider:
Payers already have their own pharmacy and medical data to analyze and use in direct contracting with pharma companies. Most payers have massive quantities of data that can be depersonalized and aggregated to study the efficacy of a given drug. Highmark, an investor in Evio, already has direct contracts with manufacturers.
Evio implies its advantage will be economies of scale, as it can aggregate data from its 20 million members spread across five health payers initially, with possibly more to come if Evio opens to other payers. These data volumes should provide the company with better evidence about drug efficacy that either it or its clients could use to negotiate prices with manufacturers.
If Evio were to broker performance-based payments on behalf of many payers, manufacturers might prefer working through one company to administer them. Such an arrangement would be more efficient than setting up and maintaining individual value-based arrangements with multiple plans.
In that scenario, though, larger payers may receive preferential pricing because of their member numbers. That raises ethical questions. If it becomes known throughout the industry that Drug X performs well with a specific patient cohort, should its performance-based pricing vary with payer size? Will demand for that specific drug drive up its cost, or will manufacturers net sufficient return on higher volumes?
If smaller payers share data with Evio or a similar company, they should ensure they receive the same agreement with manufacturers that larger payers do, simply by virtue of their participation. Their resource investment in data sharing likely would be equal to or even disproportionately larger than that of a larger payer and should be rewarded.
Rather than waiting for these questions to be answered, payers can choose to function in the same way that Evio hopes to by drawing on their existing data to contract directly with manufacturers. Here’s how:
This is not to say value-based prescription drug arrangements will be painless. Including medications traditionally covered under the medical benefit could lead to changes in existing provider agreements, benefit structures, financial accounting and underwriting.
Payers will also need to plan responses if the data shows poor clinical results. Conversely, if data points to a therapy being especially effective, how will payers work with members and physicians to ethically promote that therapy?
Regardless of how Evio performs, payers have the data and PBM partners to shift their own drug spending trajectories. Getting control over costs while delivering evidence-backed quality should net out to happier, healthier members and a strong competitive advantage.