PBMs Drive Lowest Net Cost in Medicare Part D
PBM tools have generated significant savings for the Medicare prescription drug program. Even greater savings are expected in the future:
- Continued use of PBM tools at their current levels is expected to save Part D $445 billion, compared to limited management over the next 10 years. Therefore, if the use of PBM tools is restricted in Part D, then costs for the program and its beneficiaries could increase by $445 billion.
- If all Part D plans were able to adopt high use of PBM tools, then the program and beneficiaries could double the savings, saving an additional $445 billion over 10 years.
- Both the GAO and the HHS, OIG have recently found that PBM negotiated rebates substantially reduced the growth in spending in Medicare Part D
PBM Tools Save in Seven Key Ways
Negotiating Rebates from Drug Manufacturers
PBMs negotiate rebates from manufacturers of brand-name drugs that compete with therapeutically similar brands and generics. Manufacturers typically provide a rebate if their product is “preferred,” which means it is assigned a copay lower than that of competing products.
Negotiating Discounts from Drugstores
Retail pharmacies provide discounts to be included in a health plan’s pharmacy network. The more selective the network, the greater the discount, because each pharmacy will gain more business.
Offering More Affordable Pharmacy Channels
Mail-service and specialty pharmacy channels typically give health plan sponsors deeper discounts than do retail pharmacies. These channels also help encourage the use of preferred products for additional savings.
Encouraging Use of Generics and Affordable Brands
PBMs use several tools to encourage the use of generic drugs and preferred brands. These include formularies and tiered cost sharing, prior authorization and step-therapy protocols, generic incentives, consumer education, and physician outreach.
Reduce Waste and Drug Interactions
PBMs use Drug Utilization Review and other utilization management programs to reduce over-utilization and waste, as well as reducing adverse drug events associated with polypharmacy.
PBMs implement medication adherence programs and care management programs to help patients with chronic disease stick to their prescription regimens. These programs improve clinical outcomes and reduce overall health care spending.
Managing High-Cost Specialty Medications
PBMs combine savings from all the above categories with the unique capabilities of specialty pharmacies in safely storing, handling, and delivering complex, often injectable, medications that cost thousands of dollars per dose and in providing effective patient education, monitoring, and support for those with complex conditions, such as hepatitis C, multiple sclerosis, and cancer.