Pharmacy benefit mangers (PBMs) are known for helping payers manage their drug spend through a suite of services and programs. Rooted in managing drugs covered under the pharmacy benefit, PBMs’ level of engagement has evolved to include managing drugs under the medical benefit. Advancements in drug research, approval of novel therapies, the aging US population, and growth in specialty drugs have resulted in increased spend on the medical benefit, requiring PBMs to evolve to provider fuller, more comprehensive management services to their customers.
As PBMs’ services changed, so did their membership. Almost half of the US population is covered by Medicare or Medicaid, making the federal government the largest single payer and giving it a powerful influence over how care is delivered and received.1 One of the roles of the Centers for Medicare & Medicaid Services (CMS) is to give guidance on how to manage health benefits for their beneficiaries. PBMs are evaluating how they can best support the changing needs of this large population while aligning with CMS regulations.
CMS issuing guidance on step therapy is an example of this support. Effective January 1, 2019, Medicare Advantage plans were allowed to use step therapy for drugs administered under the Medicare Part B benefit for newly diagnosed patients.2 For PBMs, this meant they could extend an effective utilization management strategy across pharmacy and medical benefits, while increasing the market basket and strengthening their manufacturer negotiation abilities.
Three of the largest PBMs—CVS Caremark, Express Scripts, and OptumRx—each have a payer arm, giving them insight into the needs of their customers. Multiple PBM trend reports have shown specialty medications accounting for almost half of drug spend, and a growing majority of those drugs are covered under the medical benefit. The active cell and gene therapy pipelines and pending boom in biosimilar availability point to plans having the ability to support an integrated pharmacy approach as the key to managing spend.
CVS Caremark, through its Novologix platform, offers a technology-based approach to administer prior authorization and step therapy protocols for Medicare Part B and Part D benefits. CMS also allows the use of step therapy to encourage biosimilar use for brand biologics covered under Medicare Part B. The CVS Caremark Biosimilars-first Medical Preferred Drug List allows clients the opportunity to maximize biosimilar uptake in 11 therapeutic areas.
Express Scripts’ Medical Drug Management program reported $93 per-member-per-year savings for Medicare plans by using multiple interventions that include utilization management programs, site-of-care initiatives, medical drug contracting, and claim editing and review.3
Investment in drug research has given rise to novel and life-continuing therapies and allowed pharmaceutical manufacturers to use science to advance healthcare. However, as costs continue to rise, payers will continue to look for ways to maximize their premium dollars in the context of quality and outcomes. Manufacturers will need to understand the dynamics between patient access and affordability and be able to show the value they can bring in improving overall outcomes and care. The additional oversight that CMS brings adds an additional layer of complexity that all healthcare stakeholders should consider.
- Jain S. The government’s role as the largest payer of healthcare services is growing. Trilliant Health. September 8, 2021. Accessed May 15, 2022. https://www.trillianthealth.com/insights/the-compass/the-governments-role-as-the-largest-payer-of-healthcare-services-is-growing
- Medicare Advantage prior authorization and step therapy for Part B drugs. August 7, 2018. Accessed May 15, 2022. https://www.cms.gov/newsroom/fact-sheets/medicare-advantage-prior-authorization-and-step-therapy-part-b-drugs#:~:text=Access%20to%20Part%20B%20Drugs&text=Under%20this%20new%20policy%2C%20step,have%20to%20change%20their%20medication
- Brouillet D. The right tools to manage medically billed drugs. Express Scripts. March 26, 2020. Accessed May 15, 2022. https://www.express-scripts.com/corporate/right-tools-medical-drug-management