Prescription Benefits Consultant Sees Opportunities for Employers in Debate Over Rebates

Prescription benefits consultant Chris Robbins, chief executive officer of Arxcel, describes the finger-pointing in Congress over lowering drug costs this way: “If it weren’t so true, it might be almost humorous.”

Pharmaceutical manufacturers blame the pharmacy benefit managers (PBMs); the PBMs blame the manufacturers, and “the manufacturers are almost scared of the PBMs,” Robbins said.

From his vantage point, as one who helps employers, unions, health plans, or payers select and contract with a PBM, neither side is blameless. “Historically, PBMs have driven manufacturers to provide rebates,” he said. “They always talk about the clinical decision being first on the formulary, but there’s been a lot of scrutiny: Are they making clinical decisions, or are they making financial decisions?”

Robbins sees the basic compensation model of the 3 largest PBMs—Express Scripts, CVS Caremark, and Optum—as basically out of alignment with the interests of the group that ultimately pays most of the costs for healthcare: employers.

The American Journal of Managed Care^® spoke with Robbins recently about employers’ increasing role as a healthcare stakeholder, the possible changes that may come to rebates, and the importance of prevention and wellness in the workplace in holding down healthcare costs.

The Payer Is the Employer

Robbins said most people do not appreciate that when an insurance company pays a claim, at least half the time it’s ultimately an employer paying the cost of the coverage. “The payer is the employer,” he said. “They are the ones writing the check.”

Thus, as issues arise about the use of rebates in prescription plans, how rebates are distributed, and how they are spent, it’s important that employers take seriously their fiduciary responsibility to make sure rebates are spent appropriately, Robbins said.

“Some employers have become used to that big fat rebate check that comes every quarter,” he said. “It doesn’t always go where it should go.”

Arxcel has worked with coalitions of purchasers of healthcare to better understand the options for use of rebates, in light of Optum’s decision in March to only accommodate new employer clients that incorporate rebates back to consumers at the point of sale. This move came amid discussions by the Trump administration that it might eliminate rebates entirely, which some said would cause premiums to rise.

Lots of Pieces to the Puzzle

It sounds good to say, “let’s just get rid of rebates,” Robbins said, but it’s not that simple. “There’s lots of pieces to the puzzle,” he said. Pharmaceutical companies entice consumers to use expensive drugs with co-payment assistance programs. There’s more money going back and forth than just rebates, he said; there are administrative and data integration fees, and if rebates went away, would other costs increase?

A PBM contract may have a page and half about rebates, Robbins said, “and three-quarters of that tells you what a rebate isn’t.”

Whose Money Is It?

The idea of directing rebates to the patient purchasing the high-cost drug is relatively new, but it has merit, Robbins said. In the past, when co-pays were $5 to $10, and before the rise of high-deductible plans, such a concept was unnecessary, but today it makes more sense, even though it presents logistical challenges, since rebates are not paid right away, and some patients eventually reach 100% benefit.

A lot of employers are beginning to realize they have a fiduciary responsibility to make sure the rebate flows the right person, Robbins said. The question is, “Whose money is it?”

“I do think it should be shared with the plan participant who’s buying that drug,” he said. In any plan, only a very small number of patients account for a disproportionate share of the costs, and a good benefit structure will make sure the patient gets the drug they need. Often, Robbins said, “It becomes more expensive if someone doesn’t take their drug.”

The issue of point-of-sale rebates has emerged very quickly; they may not happen in all cases, but they may be appropriate for certain specialty drugs. “That’s why coalitions are important—they’re empowering employers to take a stand. There are always going to be drugs out there for which there are no competing products.”

Prevention and Wellness

Employers “are getting smarter” about issues of prevention and wellness, he said. Preventive drug lists need revisions so that more important drugs can get to consumers without a co-pay, but this will require action from Congress.

The challenge is coming up with payment models that make sense for employers, so that it makes sense for an employer or payer to invest in an expensive therapy that prevents a complication 20 years from now, when the employee may be long gone from the company. Payers have already seen this with the cures for hepatitis C virus, but they will see a new wave of challenges with gene therapies now in the pipeline.

Robbins said he supports fair compensation for pharmaceutical companies to support research and development; he hopes industry reform comes from within. “They’d better police themselves before government gets involved.”

Employers, he said, “need to put their foot down,” and make clear what they will and will not do. “Employers need to hold pharma and PBMs responsible.”