One of the better reviews of the current push for transparency in drug pricing was published by the Napa Valley Times (with assistance from the WSJ).
Huge employers – Caterpillar, Perdue Chicken, the University of Michigan to name a few, are forcing their PBMs to pass thru rebates, fully disclose pricing and the basis thereof, and in some cases charge for their services on an administrative-fee only basis.
If this sounds familiar, it is. Think of the growth of self-insurance in the nineties, the focus on physician reimbursement and hospital profit margins and the efforts by large employers to contract directly with providers (that waxes and wanes).
But there’s something deeper going on here. Employers don’t see that intermediaries – PBMs, HMOs, insurers, managed care firms deliver much in the way of “value”. For that matter, the continuing decline in physician income clearly illustrates that payers don’t think they are getting their money’s worth there either.
And if the value perception is low, then it comes down to price – buyers just want it cheaper.
That’s how commodities are sold. And if intermediaries – HMOs, PBMs, managed care firms, insurers – can’t effectively demonstrate value, then they will become commoditized.
Just like physicians have.
What does this mean for you?
Figure out how to demonstrate value – by asking payers what they want in terms of outcomes. Then provide it to them and document it.
