Lecture 5: Pharmacy Benefit and Formulary Management

Question 1

What is the goal of PBMs?

Answer 1

Maintain or reduce pharmacy spend while improving health outcomes

Question 2

How do PBMs maintain or reduce pharmacy spend while improving health outcomes? In other words, what do PBMs do?

Answer 2

• Develop and maintain the drug formulary
• Contract with pharmacies
• Negotiate discounts and rebates with drug manufacturers
• Process and pay prescription drug claims
• Develop and implement clinical programs

Question 3

What are the adminstrative functions offered by PBMs?

Answer 3

• Pharmacy network development
• Rebate contracting
• Claims processing
• Eligibility maintenace

Question 4

How do PBMs develop a pharmacy network? What do pharmcy networks allow PBMs to do?

Answer 4

• PBMs contract with pharmacies to create a “network” which is pharmacies that agree to dispense prescriptions and provide pharmacy services to the health plan’s enrollees
• Networks allow PBMs to lower precription drug prices (negotiate dispensing fees and reimbursement rates and lower prices because of “guaranteed” prescription volume)

Question 5

How does rebate contracting work for PBM?

Answer 5

• PBMs negotiate prices with pharmaceutical manufacturers for rebates (reimbursement) on drug products

Question 6

Why would manufacter reimburse(rebates) the PBM?

Answer 6

For preferred status on a plan’s formulary
***PBM can keep rebate in full or “pass through” savings to payer

Question 7

What is the Claims Processing called? What does the claims PBM system verify?

Answer 7

• Adjudication
• prescription drug coverage
• formulary restrictions
• drug interactions
• patient cost sharing information (copay or coinsurance)

Approval/Rejects happens in less than 5 seconds and creates an electronic warehouse to store prescription drug informatio

Question 8

What is Adjudication?

Answer 8

this task involves assessing the coverage of the medication prescribed to the patient. It is important to determine whether the medication is covered by the patient’s insurance policy. The task impacts the overall process by verifying if the medication can be claimed.

Question 9

What is a medication formulary? Does it include brand or generic drugs?

Answer 9

a continually updated list of prescriptions drugs that are approved to be prescribed (covered) and offer the greatest overall value
* includes both brand and generic drugs
* Can exclude specifc classes of drugs such as cosmetic drugs, lifestyple drugs, OTC drugs

Question 10

Who decides what drugs go into a medication formulary?

Answer 10

Pharmacy and Therapeutics (P&T) committee

Question 11

What does the P & T Committee do? Who is in it?

Answer 11

Comprised primarily nurses, doctors and pharmacists
* Evaluate clinical efficacy, safety, therapeutic eed, clinical guidelines, standards of medical practice, treamtent alternatives, pharmacoeconomic models, cost

Question 12

Describe and give examples of the drug utilization management strategies that PBMs use

Answer 12

1. PA
2. Quantity limits (days supply, dosage limits)
3. Step therapy

Question 13

What is prior authorization?

Answer 13

requires the prescriber to submit specific patient information to justify use or for ensuring appropriate use of drug

Question 14

What is Step therapy?

Answer 14

Requires previous use of established, cost effective first line drug before progressing to other therapies

If a health plan uses step therapy for certain drugs, it means that a patient can be required to try a lower cost prescription drug that treats a given condition before “stepping up” to a similar-acting, but more expensive drug.

Question 15

What is a quantity limit?

Answer 15

A quantity limit is the highest amount of a prescription drug that can be given to you by your pharmacy in a period of time (for example, 30 tablets per month). Some drugs have quantity limits to help encourage appropriate usage, ensure effectiveness and reduce costs.

Question 16

Describe and give examples of tools PBMs use to lower prescription drug costs and help
make sure drugs are used appropriately

Answer 16

• maximize generic drug use
• use of PAs
• quantity limits

Question 17

What are formulary “tiers”?

Answer 17

• Tier 1: Generics
• Tier 2: Preferred Brand-Name
• Tier 3: Non-preferred brand-name
• Tier 4: Specialty/biosimilars

A tiered formulary divides drugs into groups based mostly on cost. A plan’s formulary might have three, four or even five tiers. Each plan decides which drugs on its formulary go into which tiers. In general, the lowest-tier drugs are the lowest cost. Plans negotiate pricing with drug companies.
**lower-tier is most ideal for patients
**excluded (non-preferred) medications are not covered and are full cash price

Question 18

How do pharmacies promote generic prescription drug use?

Answer 18

1. lower copays
2. outreach programs to physicians& patients
3. Generic Fill Rate (GFR)

Question 19

What is the Generic Fill Rate?

Answer 19

number of generic claims processed, expressed as % of all prescription drug claims

Question 20

What are the drug benefit offered by PBMs?

Answer 20

1. Formulary management
2. Utilization management
3. Generic use programs
4. Mail service (lowers dispensing costs= higher profit per Rx)

Question 21

Describe how PBMs use prospective and retrospective DUR.

Answer 21

Drug utilization review (DUR) is defined as an authorized, structured, ongoing review of prescribing, dispensing and use of medication.
* Prospective - evaluation of a patient’s drug therapy before medication is dispensed
* Retrospective - review of drug therapy after the patient has received the medication

Question 22

Describe examples of clinical programs that PBMs can offer.

Answer 22

Medication Therapy Management (MTM)
Disease State Management (DSM)

Question 23

What is MTM? What are some examples?

Answer 23

Medication Therapy Management
A service or group of services that optimize therapeutic outcomes for individual patients (Patients may receive this specialized care from a pharmacist)
Examples: medication therapy reviews, anticoagulation management, immunization record, health and wellness program
***Medication Therapy Management services usually include a discussion with a pharmacist or health care provider to review your medications. These services may vary by plan. Through the MTM, you may get: A comprehensive review of your medications and the reasons why you take them.

Question 24

What is DSM?

Answer 24

Disease State Management
* Goal is to manage and improve the health status of a defined patient population over the entire course of the disease
* Disease management is the concept of reducing health care costs and improving quality of life for individuals with chronic conditions.
* Disease state management integrates services from all areas of healthcare. To evaluate whether a disease is being treated effectively, clinical, physical, and quality of life, indicators need to be measured.
Examples: diabetes, asthma, heart failure

Question 25

Provide examples of pharmacist’s roles in PBMs.

Answer 25

Clinical: formulary management, P&T committee, clincal programs, account manager
Operational: call center, mail service
Administration/Corporate: Specialty products, informatics, marketing, outcomes, regulatory/compliance

Question 26

How do PBMs control access and cost by implementing specifc utilization management programs (step therapy, PA, quantity limits)?

Answer 26

PBMs use a formulary to control access and cost

Question 27

What is a manufacturer rebate?

Answer 27

Basically drug mamufacter asks PBM to put their drug in their formulary and PBMs will negiogiate a discount for drug to be a preferred drug. Manufacturers pay PBMs and PBMs keep that rebate or reimbursement

Question 28

What does the term “white bag” mean?

Answer 28

patient picks up medication from hospital or pharmacy
***most common

Question 29

What does the term “brown bag” mean?

Answer 29

drug goes to the patient and patient takes it to doctor’s office

Question 30

Can community pharmacies dispense specialty drugs through PBM contracts?

Answer 30

NO! only speciality pharmacies

Question 31

**

What are the 4 different ways for medical errors (medication use process)?

Answer 31

1. Prescribing (provider, patient)
2. Dispensing (pharmacists)
3. Self-administration (patient)
4. Monitoring (patient)

Question 32

Which DUR is required by law for pharmacists?

Answer 32

Prospective DUR

Question 33

What is on the prospective DUR checklist? Prior to dispensing any prescription, the pharmacist shall review the patiet profile for the following:

Answer 33

1. over utilization or under-utilization
2. therapeutic duplication
3. drug-disease state contraindications
4. Drug-drug interactions
5. incorrect drug dose or duration of treatment
6. drug-allergy interaction
7. abuse/misuse

*you do this for every prescription