LucyRx Partners with Employers for a New Kind of PBM

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LucyRx will begin providing pharmacy benefit services to self-insured employers, covering about half a million lives, beginning in January 2025.

Over the last 18 months, the pharmacy benefit manager (PBM) LucyRx has acquired and developed new technologies for managing claims, formed strategic partnerships, hired 100 people including clinicians, aligned with 65,000 pharmacies and signed new clients. And beginning in January 2025, the new PBM will begin providing pharmacy benefit services to self-insured employers, covering about half a million lives.

Related: New PBM Launches to Bring a New Model to Pharmacy Benefits

David Blair

David Blair

LucyRx launched last year with $500 million in equity and with a goal of making drug benefit management more accessible and understandable for clients and consumers. The PBM has embraced full transparency, David Blair, CEO of LucyRx, said in an interview.

"The traditional PBM model is mired in complexity and opaque pricing, leading to soaring drug costs,” he said. “A lot of PBMs talk that game, but we go down to the drug level. And we will share with a client the specific rebates on the drugs. We don't do averages.”

Technology that Manages High-Cost Drugs

LucyRx, Blair said, has made a commitment to be a fiduciary for their clients. “We have a commitment to accountability. To us, that means we're going to treat your money like it's our own money. It’s our company policy to think about whether we would recommend that drug or whether we would cover that drug."

The company is focused on value for clients. "It’s hard to see benefit from a low wholesale acquisition cost (WAC) formulary versus a high rebatable formulary.”

LucyRx, Blair explains, is agnostic as to where a drug is dispensed. “We want to partner with clients. If they want to use Mark Cuban’s Cost Drugs or Amazon, whatever customers are interested in. We don’t own retail pharmacies and we don’t manufacture drugs.”

Blair is referring here to both CVS’ and Evernorth’s efforts to provide private label biosimilars to their the PBMs. CVS was the first to make this move in August 2023 when it announced it was launching Cordavis to co-produce biosimilar products. Cordavis has a supply agreement with AbbVie to co-produce the anti-arthritis drug Humira (adalimumab) and has also contracted with Sandoz to bring to market Hyrimoz, another Humira biosimilar.

Evernorth followed this move, announcing in April that it would produce a biosimilar through its affiliate private label pharmaceutical distributor, Quallent Pharmaceuticals, through agreements with multiple manufacturers.

Clients, Blair said, are disappointed in how the market for Humira biosimilars has played out, especially with the two-tiered low-WAC/no rebate and high-WAC/rebate pricing. “We had an opportunity to save billions of dollars by switching to biosimilars. But it wasn’t realized because of the huge rebates. It was only when CVS started manufacturing its own biosimilar of Humira that it switched 93% of patients to that biosimilar.”

Effective April 1, CVS Caremark removed the branded Humira from its national commercial template formularies. Company officials reported in its presentation at the Bank of American 2024 Healthcare Conference that CVS Caremark had achieved more than 90% conversation from Humira to its biosimilar, saving clients about $140 million. Thomas F. Cowhey, executive VP and chief financial officer of CVS Health said the company plans to launch additional biosimilars through Cordavis.

Managing Claims for Outcomes

Blair said LucyRx has made significant investments in technology to help determine for clients the lowest possible costs. “This reinforces that were agnostic to where the drug is dispensed. The system going to find the most appropriate medications and at the lowest cost for that member. There is a concierge service element to it,” he said.

In addition to processing claims on industry leading cloud technology, LucyRx has invested in tools that aim to take the guess work of drug costs. The PBM is able to provide detailed, claim-level reporting and real-time formulary analytics.

LightningIQ is a decision support tool for improving costs and outcomes. The Specialty Navigator identifies cost containment opportunities, and company officials say it could save clients up to 70%. Blair said, however, that savings will depend how aggressive clients want to be. The company customizes the formulary for its clients, but Blair said they are mindful of member disruption.

For members, LucyRx provides an integrated discount program for generic drugs. The program integrates with current patient drug profiles for medication safety and require separate discount cards or assess added fees.

“We’ve integrated discount programs, such as GoodRx and loyalty cards, within our offering so that our claims will adjudicate based on the lower of our contractual rate, usual and customary, or what's the lowest cash discount available,” Blair said. “This is important because we are able to capture that claim and report it back to our clients to do a better job managing our patients’ outcomes. This drives incremental savings.”

Specialty Navigator can help identify and monitor spending trends is high-cost categories, such as the GLP-1 drugs that are used to for diabetes and weight loss. Additionally, the LightningIQ program can help LucyRx identify patients who may not be compliant.

This GLP-1 class of drugs is set to explode. About 12% of adults have used GLP-1 drugs either to treat diabetes or to lose weight, according to the latest KFF Health Tracking Poll. Of those who report taking the GLP-1 drugs, 43% have diabetes, 26% have heart disease and 22% have obesity or overweight (22%).

Sales of GLP-1 therapies have grown by 58% in 2023 compared with 2022, with the diabetes drugs Ozempic (semaglutide) and Mounjaro (tirzepatide) driving most of the volume growth, according to data from IQVIA. Going forward, spending on the GLP-1 class of therapeutics is expected to grow by 378% to $8.1 billion by 2027.

Currently, GLP-1 drugs represent about 42% of overall drug trend, Blair said. LucyRx will work with clients who want to provide coverage for the GLP-1 drugs, developing prior authorization programs or implementing lifetime limits for companies that are interested in that. Also included are lifestyle and education programs for patients to help improve outcomes.

“With all of the comorbidities that are associated with obesity, whether that’s heart disease, or diabetes, or mental health, these programs can help drive savings for our clients,” Blair said.

He also said LucyRx has rolled out an international sourcing program for some high-cost drugs, such as the GLP-1 drugs for clients who are comfortable with that option. “We partner with our clients. We want to truly make a difference in how pharmacy benefits are managed.”

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