Battle-tested experience helps plans reorganize pharmacy benefit

February 1, 2005

A 19% to 23% Annual Drug cost trend during the past three years was a wake-up call for Virginia Premier Health Plan, a Medicaid HMO in Richmond, Va. Relying on the services of the same pharmacy benefits manager (PBM) since the plan's inception in 1995, Virginia Premier sought a new PBM to bring costs into control. That role was filled by PerformRx, a PBM product offered by Philadelphia-based AmeriHealth Mercy Health Plan.

A19% to 23% Annual Drug cost trend during the past three years was a wake-up call for Virginia Premier Health Plan, a Medicaid HMO in Richmond, Va. Relying on the services of the same pharmacy benefits manager (PBM) since the plan's inception in 1995, Virginia Premier sought a new PBM to bring costs into control. That role was filled by PerformRx, a PBM product offered by Philadelphia-based AmeriHealth Mercy Health Plan.

Melvin Pinn, Jr., MD, chief medical officer for the health plan, says they had been experiencing data-capture issues, causing inaccurate encounter data to be submitted to the state; data-storage issues leading to inefficiencies in complying with HEDIS requests; and difficulty operationalizing customized point-of-service utilization management edits.

What made the transition so unusual was its 45-day turnaround period, during which Virginia Premier kept its same benefit design with an identical formulary-eventually changing from a closed formulary to a preferred drug list. It continued to use the same national retail pharmacy network until a more plan-specific one could be developed. Within 12 months, all product/service cost and utilization management programs were implemented.

"We are attractive to provider-sponsored health plans and work closely with plan medical leadership to develop protocols, and design appropriate therapy edits and safe and effective generic programs," Lyman continues. "In addition, we not only have experience with Medicaid, but also with dual eligibles. We may not be a big player [with 50,000 to 200,000 lives] but are confident we can be a part of the new Medicare Advantage program."

In its own organization, AmeriHealth Mercy took advantage of PerformRx to bring drug spend for hemophilia from $10 million down to $8 million between 1999 to 2000, despite adding 15 new patients to it original 50. Lyman says that PerformRx has "battle-tested experience" in treating hemophilia and has been successful in negotiating good blood factor unit costs from manufacturers, developing evidence-based protocols, and using dedicated case managers.

AmeriHealth Mercy also has taken a proactive approach to polypharmacy, reducing prescriptions from 20 to 11 per month on average by tracking physician prescribing behavior through data and by reaching out to physicians, making them aware of their habits. "By taking pharmacy benefit management in-house, we are able to coordinate efforts and manage all costs, from emergency room use to hospitalizations," Lyman says.

SHOWING RESULTS Dr. Pinn at Virginia Premier says that once the transition period to PerformRx was complete, the new program tackled a three-prong strategy:

The rebate plan attached a fixed rate per prescription, triggering a 20% improvement in rebate dollars, while aggressive retail network pharmacy pricing resulted in a 2% overall improvement for brand products and a $.50 to $.75 per prescription improvement for generic drugs.

Previously, members without a prior authorization for proton pump inhibitors (PPIs), for example, received continuous prescriptions for the drugs for more than 12 months without a review. In addition, members received 30 tablets per month of Ambien for many months without a review.

Fourteen months after the switch to PerformRx, the cost per prescription increased by only 0.1% after rebate (2.56% before rebate), while the average per-member, per-month decreased by 8.64% after rebate (6.5% before rebate); generic utilization grew from 51.36% to 55.8%.

In October 2003, Virginia Premier and PerformRx designed an injectables program, primarily addressing respiratory syncytial virus (RSV)-a regional and seasonal problem affecting many newborns-to the tune of $1,200 to $1,500 per injection. The new program cut costs sixfold.