August 2, 2007 
So, URAC has decided to focus on accrediting PBMs. This caught my eye especially when one of the press releases I saw mentioned communications. With 70% of Americans receiving their pharmacy benefits through PBMs, perhaps this could have an impact. If you go look at the expectations for accreditation, I saw several interesting things:
- There has to be a continuous improvement plan around quality (is that Six Sigma, Lean, BPM, or just a general plan?)…any option is good.
- Does the PBM have the capability to disclose and educate members on costs and optimizing their benefit? (what about whether they do it…but key capability)
- Is the member information at the right reading level and culturally sensitive? It would seem like you would want to require at least some multi-lingual capabilities in letters or via the call center.
- How is over / under utilization monitored? Does this mean how do they drive compliance which is very complicated…but again a good objective?
- Does the PBM have a medication therapy management (MTM) process? WOW. This would be great to offer beyond the Medicare Part D. Expensive to help members manage their total set of drugs and provide counseling from a pharmacist.
Overall, I think it has the right objectives. A lot of it is dependent upon communications. How does the PBM mine their information? When and how should they communicate with patients? What information do they push to them? What information do they provide for them? What channels do they use? How do they make a difference?
If taken to the next level, this could be a huge driver of consumerism in the pharmacy space by giving “points” (i.e., accreditation) to those that do it. Hopefully, it is more than simply having the ability to do it, but actually executing successfully on that capability. Then, some of the work I have been doing around data mining, optimization, and channel management of communications will be critical path.
Enabling Healthy Decisions 
Gerry – I welcome the comments. It is certainly one perspective.
Here are just a few points from what I have experienced in the industry.
1 – The margin (retail or mail) is the same. It is basically a pricing issue relative to the plan sponsor and then the patient in the form of a copayment. PBMs make more when they are the pharmacy as they should.
2 – The local care continuum is a great concept, but I am not sure I see that happening. Even studies show that most patients don’t even know the name of their pharmacist(s) and go to multiple pharmacies.
3 – Moving to higher rebateable products happened some in the past, but it was to save the plan sponsors money. I think most of that activity is long gone. Generics are a win-win-win. Plan sponsors and patients save money while the PBMs (or retailers) make more money.
4 – I have never seen retailers offer the discounted rates that mail order pharmacies do. In many cases, where the state required us to offer that to the retailers, they said they wouldn’t match the prices.
I could go on, but this is likely an issue where we will have to agree to disagree. There are whole lobbyist groups on both sides fighting this battle.
George, that is just not correct and little misguided. I am not an R.Ph but I have been credited with starting the national PBM discussion on transparency in 1998 and have personally briefed 13 Attorneys Generals and numerous legislative bodies on the PBM model. And, I have probably seen more PBMs docs than any consultant in the country. First, local RPhs routinely make suggestions to help patients, including recommending lower costs generics — they would do even more – including counseling – if their hands were not tied, often by PBMs who control and “manage” the benefit. The suggestion that mail order is a cost savings is not accurate; it is usually a slight savings or break-even for branded products, but more expensive than retail for generic products. The PBMs make eight times the margin on mail ($28-$30 per script) than they do on retail spread, which explains why they push it aggressively. It is not worth it after you also consider how it disrupts the local care continuum. That is counter to the PBM mail hype, but that is what the actual claims re-pricing audits reveal, time and time again. The data you speak about that PBMs push – moving towards more consumerism – is almost always self serving, i.e. to increase to higher rebateable products, adding $6 billion to America’s drug costs during the 90’s, and most recently encouraging movement to mail where they make 55% of their margin or brand to generic switches, which are highly and disproportionately profitable to the PBMs, especially during the exclusionary period. I hope this helps – and I hope you post it. I am always happy to help clarify further.
Charles – Thanks for the comment. PBMs have definitely benefited from the increased utilization of Rxs across the US and their ability to manage this for consumers. I think their profits are still in the single digits which isn’t outrageous.
We could argue the model, but I think they are trying to help consumers by serving as a focal point to drive information to consumers. When was the last time you went to your local pharmacy and then suggested a way to reduce your copays (e.g., moving to a therapeutically equivalent generic or mail order)? Additionally, they are trying new models like the Medco Therapeutic Resource Centers that put pharmacists at a point to help patients manage their disease states.
Unfortunately, most RPhs at the point-of-sale don’t have the time to spend with patients counseling them.
The URAC “points” system should DEDUCT points for fraudulent acts by PBMs. I suggest deducting one point per million dollars in Fraud Settlements. This would make URAC Accreditation somewhat meaningful. As it is now, all URAC Accreditation does is further complicate an already — complicated drug delivery system. I believe this is deliberately designed to keep “real” transparency into how they conduct their business at bay (see the HR Policy Assn.s’ TIPPS Standards).
With Medcos’ profits for the 2nd quarter up 26% and CVS/Caremarks’ having DOUBLED, thank God they are saving us all this money — who knows where we’d be without them.