Should the same entity be allowed to own a retail pharmacy, a PBM and an insurance company?

Left to Right: Amanda James, Senior Healthcare Legal Correspondent, MedCity News; Wendy Barnes, CEO, Rx Benefits; Joshua Friedel, Vice President and Head of PBM and Specialty Product Innovation, CVS Caremark; AJ Loiacono, CEO, CapitalRx and Snezhana Mahone, Chief Operating Officer, Transcarent

The Big Three – CVS Health, Cigna and UnitedHealth Group – Accounting for 80% of all adjusted claims in 2021 for prescription drug benefits Through their business of pharmacy benefits management. Two of them also own an insurance company while CVS Health owns an insurance company and a retail pharmacy.

In June, the Federal Trade Commission She announced that she was checking What many people believe are unfair business practices from the administration of antipersonnel drugs that stand between drug manufacturers and consumers and drive up drug prices. The FTC investigation includes the Big Three — CVS Caremark, Cigna ExpressScripts and United’s Optum — as well as Humana, Prime Therapeutics and MedImpact Healthcare Systems, the nation’s largest independent pharmacy.

Meanwhile to give these Goliath(s) a chance to get their money back, a whole bunch of upstart David(s) sprang up to offer to be more transparent than established PBMs. So, when MedCity News’ INVEST Digital Health conference brought together the 3 largest and smaller startups last week in Dallas to discuss the future of PBMs, it seemed appropriate to ask the most obvious question: Should the same entity be allowed to own a retail pharmacy, insurance company, management subsidiary Pharmacy benefits? That’s the question moderator Amanda James, chief health care legal reporter, MedCity News, put to committee members.

Here’s how the committee members work – Wendy Barnes, CEO, Rx . Benefits; Joshua Friedel, PharmD, Vice President and Head of PBM and Specialty Product Innovation, CVS Caremark; AJ Loiacono, CEO, Capital Rx and Snezhana Mahone, Chief Operating Officer, transcarient – he answered:

“You’d expect ‘no’,” CVS Caremark’s Ferdel replied to the audience’s laughter. “I’ll go first since our model hit.” [more laughter from audience.]

Friedel, a former pharmacist, added:

I think the important part that we see is that there has to be better integration across the system and how these modules come together. Did we do it perfectly? No, but it gives us an opportunity to do that and we want to take advantage of that for a better patient experience and better cost management. And I think that’s what we ask of our customers. It’s like, are we doing a good enough job of managing costs, managing care in an integrated model that brings these assets together.

Barnes, who is also a pharmacist, and president Company arrogant benefits Try to pay attention to the middle line – not to say “no” to the issue of one entity owning a pharmacy, PBM, and insurance company – but exposing the flaws nonetheless.

I think it’s conceivable that the idea of ​​connecting all the dots, right – your inpatient, your outpatient, your pharmacy, your doctor – makes sense. We all know that you want to see the full picture to better manage results. Where the model is bogged down is that the incentives are no longer aligned with the customer. And unfortunately, if you’re a subscriber to all of these services, you’re not quite sure what value you’re getting in each part of them. And God forbid, if you decide to get rid of yourself, let’s use a specialized pharmacy as an example, then suddenly you have financial penalties … for services that you no longer buy from a full-fledged model. You are now fined for things you don’t get that you are now buying outside of that group. And that for me is where the model breaks down a bit. But the idea of ​​keeping them together is conceivable, it makes sense on paper. It’s just an implementation issue.

By contrast, Loiacono, CEO of software developer at Capital Rx, Take a no-ban approach. With a rigid facial expression, he launched a violent attack on the existing system, accusing the “vertical-integrated entities” of unfair practices. [Both Barnes and Mahon  began to nod their heads in agreement as he spoke at length]

I think this is a world of rainbows and sunshine that you describe. And you know, what I see is, unfortunately, an abuse of power…. So what happens is that in the free market we have to have, my company is going to compete to get the pharmacy benefits and they’re going to win and they’re going to get the business. Then the medical carrier, oftentimes, the vertically integrated entity that lost business because it couldn’t offer a competitive rate or service suddenly says, “I won’t share data, I’ll ban you.”

So what they want to do is keep building walls, artificial barriers that have nothing to do with better care. So I find this behavior reprehensible.

So the promise and the vertical integration and the rainbow and the sunlight that people are talking about is great, but let’s go back to what we need, which is access to motivation data and no anti-competitive behavior. This is my position.

Without being exactly as in your face, Mahon with TRANSPARENT, FORMER Pharmacistcalled for wholesale change.

I would just add from a consumer point of view, the system has to be completely destroyed and redesigned… in the end they are the payers of care and they suffer, they are lost. Today’s health care system has become more complex, more confusing, and completely unaffordable. And so when you think about that consumer experience, transparency has to be front and center…. And so what we’re trying to do in Transcarnet is very similar to what AJ was describing, sort of bring that transparency to the consumer.

But we do it across the board, across the medical, behavioral and pharmacy benefits because you can’t have a pharmacy on one end of the equation. You need the data to actually connect all the elements to deliver this comprehensive care.

It’s not immediately clear when the FTC’s investigation into RBM practices will end, but in its announcement, the agency made it clear that it would specifically look at the following:

  • Fees and refunds charged for non-affiliated pharmacies

  • Methods of directing patients towards pharmacies owned by pharmacy managers;

  • potentially unfair audits of independent pharmacies;

  • complex and ambiguous methods for determining pharmacy reimbursement;

  • the prevalence of prior licenses and other administrative restrictions;

  • Use of specialty drug lists and surrounding specialty drug policies;

  • The effect of drug manufacturers’ rebates and fees on formulary design and prescription drug costs for payers and patients.

One group that immediately welcomed the FTC’s announcement was the National Society of Pharmacists’ Syndicate.

“PBMs behave like monopolies. Their covert and anti-competitive practices increase the price of prescription drugs, limit consumer choice, and hinder competition,” said CEO B. Douglas Hoy in a statement. “They have escaped serious scrutiny for far too long, but this study will reveal their filthy clothes in the open.”

All eyes will be on the FTC now, and CVS Caremark will be ready to defend itself when James asked how it is preparing for the upcoming investigation.

“II’m not into that, so I couldn’t talk about how to prepare for that, but I’m sure we’re well prepared and I expect this to be part of the general type of market survey in an entire space,” Friedel said.

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