Manufacturer-PBM Collaboration

September 24, 2019

Finding solutions to deliver better outcomes for patients.

“Manufacturers and PBMs are good at what they do,” says Blasine Penkowski, chief strategic customer officer at Piscataway, New Jersey-based Johnson & Johnson Health Care Systems, which provides contracting, supply chain, business services, and strategic solutions.

Biopharmaceutical companies have delivered innovation in recent years, while PBMs have been effective in containing pharmaceutical costs, she says.

Penkowski cites some statistics to back up her points:

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The total rate of medical inflation in the United States rose approximately 2%.

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But the current system isn’t working for patients, says Penkowski, who spoke at the Pharmaceutical Care Management Association Annual Meeting, in Scottsdale, Arizona, on September 23 and 24. To wit, commercially insured patients with a deductible saw their out-of-pocket costs for branded medicines increase 48% from 2013 to 2016.

Managed Healthcare Executive (MHE) recently asked Penkowski for her pulse on the manufacturer-PBM relationship.

MHE: What trends are you seeing related to the relationship between manufacturers and PBMs?

Penkowski: We’ve begun to see earlier interactions between PBMs and manufacturers, in preparation for launch. Manufacturers know how critical early communication is in facilitating payer and PBM planning.

Now, thanks to recent FDA guidance, manufacturers can begin sharing scientific information even earlier in the process. Better dialogue can help payers and PBMs plan for what’s coming so that patients can have the right therapy at the right time. This is going to be crucial as cell and gene therapies and other innovative medicines are developed.

We’re also seeing a trend toward combined medical/pharmacy benefit management. In the short term, this gives payers and PBMs greater leverage in the market. In the long term, it presents an opportunity for us all to work together for the patient.

Combined medical/pharmacy benefit management paves the way for value propositions that take into account medical-side outcomes, which include the total cost of care such as hospital readmissions and doctor office visits. Medical-side outcomes can help align incentives in ways that tackle health challenges related to medication management, such as undertreatment, adherence, and abandonment.

Related: Specialty Pharmacy Exec: Gene Therapies Require Innovative Payment Strategies

MHE: What are some ways PBMs and manufacturers can work together to improve patient health?

Penkowski: First, we need to find a way to address adherence. Over the long term, lack of adherence results in poorer health outcomes and can lead to higher overall system costs. The Congressional Budget Office estimates that for every 1% increase in the number of prescriptions filled by Medicare beneficiaries, spending on medical services decreases by about 0.2%.

Second, we can work together to identify patients who are undertreated. PBMs have data that can be used for this purpose, as well as substantial predictive analytics capability.

Finally, abandonment is another critical place to cooperate. We all want solutions that deliver better outcomes for patients. Patients with higher out-of-pocket costs are more likely to abandon their new prescriptions at the pharmacy: 69% of patients in commercial plans didn’t start therapy when faced with out-of-pocket costs exceeding $250.

To return to an earlier point, one step we can take to address these issues-at least on the contracting side-is by structuring value in a way that takes into account the total cost of care and the medical-side implications of choices made on the pharmacy side. We’ll see more of this as consolidation continues and pharmacy and medical benefit designs are seen through the same lens. In addition, we need to make sure the environment supports value-based contracting.

There are many areas where the government can provide additional clarity to better facilitate manufacturers’ sharing risk with payers. This includes establishing safe harbors and clarifying the treatment of value-based contracts in government price reporting calculations, including in Medicaid 'best price.'

Beyond steps the government can take, we need to continue to look for ways to modernize our healthcare data system to make it easier to track patient outcomes.

MHE: What’s new about the market dynamics of the manufacturer-PBM relationship that surprises you?

Penkowski: The policy environment is constantly changing. This presents challenges, of course, but also opportunities to think about how we serve patients.

Take, for example, the drug rebate rule that was under consideration by the Trump Administration. We all expected it to become a reality. We all prepared for it. We were all surprised when it didn’t happen. Now we’re waiting to see what the U.S. Congress will do with respect to rebates and where the U.S. Congress or the Trump Administration will land with respect to a host of other potential changes.

In the end, though, envisioning and preparing for a post-rebate world made us all-manufacturers and payers alike-aware of what it would take, operationally speaking, to change the way we do business.

We learned that we could prepare for change. The fact that there’s so much up in the air means manufacturers, PBMs, and payers have a chance to come together to rethink how we deliver value to our customers and, above all, how we make life better for patients.

Aine Cryts is a writer based in Boston.