BCBSNC tries to pull one over on us, but we aren't fooled...
My husband works for our local county government. This county uses one of the “bigs” in benefits consulting and, of course, they recommend Blue Cross & Blue Shield of North Carolina to administer the county’s health plan. Shocker, I know.
Today, my husband received an email from the Human Resources Department at his county. It explains that there are significant changes ahead for the way BCBSNC administers their prescription drug benefit. It never mentions the pharmacy benefit manager (PBM) that BCBSNC owns, Prime Therapeutics. I mean, why bother? It’s just too confusing. And therein lies many of healthcare’s problems, right?
When confusion reigns, many opt to skim over the details, opt not to read the fine print, or ask questions. This is actually a good strategy for BCBSNC and the employers who perpetrate their plans on unsuspecting employees. A confused employee is one who doesn’t challenge the status quo and spends more money because they don’t have the kind of healthcare savvy to avoid costly care.
All this is counterintuitively profitable for BCBSNC. You may be scratching your head on that one. Why would it be more profitable to BCBSNC if an un-savvy employee spends more money? Well, I said it was counterintuitive, didn’t I? The answer lies in an under-the-radar provision of the Affordable Care Act…the medical loss ratio. That part of the ACA was spun to sound as if it protected policyholders. On the contrary, it’s almost singlehandedly responsible for the year-over-year increases most health plans have seen under the BCBSNC umbrella. In fact, since the ACA was passed in 2010, the stock prices of BCBSNC, along with their other counterparts, have skyrocketed. Imagine if your retirement account showed this kind of growth? You’d be sitting pretty right now. Instead, your retirement is likely in jeopardy due in part to the amount of wealth the BUCAs* have extracted from you and others. Think on that for a minute.
(*BUCA stands for Blue Cross, UHC, Cigna, Aetna. I left Humana off because they exited the employee benefit space in 2023.)
BUCA Stock Price Increase Since Passing of ACA in 2010. “BUCA” stands for Blue Cross, UHC, Cigna, Aetna.
I don’t know who had the crystal ball. Someone must have known that the BUCAs were going to buy up the largest PBMs, and vertically integrate them into their opaque stack of solutions. These solutions trade your money between themselves in backroom deals where you can’t see what’s going on, and that’s exactly what happened. Blue Cross owns Prime Therapeutics, UHC has always owned Optum Rx, Cigna owns Express Scripts, and CVS/Caremark merged with Aetna to become CVS Health.
Let’s just put it like this, if any of these names are on your health plan ID card…good luck finding out where all the money is going. If you’re not sure what I mean by vertical integration, here’s a quick picture curated by Adam Fein of Drug Channels Institute to tell the story:
OK, back to what’s happening in my husband’s health plan. The email he received today said this, “Blue Cross NC is taking several steps to help control the prices of prescription drugs for our customers. Many of the changes we are making will help us continue to offer sustainable health plans for our customers over the long term.
Ongoing programs such as utilization management and formulary management help us provide our members with access to drugs that are safe, effective, and as cost-efficient as possible.
Blue Cross NC is committed to helping our members get the most appropriate medications. We regularly review medical research and costs of medications. A team of doctors and pharmacists use this information to make sure Blue Cross NC covers the most effective medicines while keeping costs more affordable for everyone.
We encourage our members to talk to their doctors and pharmacists, to determine if lower cost medications may meet their needs.”
Interesting, right? Don’t stop reading. It gets better. All that gobbledegook above is BCBSNC code for “we’re not making enough money on your prescriptions so we’re going to pretend these new changes are good for you…but don’t worry, we’re going to be making even more money when all this is said and done.”
Here’s an excerpt from the email signaling the first Pinocchio they’ve earned.
“NEW REQUIREMENTS
Flovent Diskus, Flovent HFA
These medications will require step therapy on the Enhanced formulary, non-formulary review on the Essential formularies and value prior authorization on the Net Results formulary. Preferred products include Arnuity Ellipta, Asmanex HFA, Asmanex Twisthaler and Qvar Redihaler.
Ibrance
This medication will require step therapy on Enhanced and Net Results formularies and non-formulary review on the Essential formularies for new utilizers. Preferred products include Kisqali and Verzenio.
Tiotropium capsules (generic Spiriva Handihaler)
This medication will require prior authorization on the Enhanced formulary. Brand Spiriva Handihaler is preferred.”
Here, they’re telling employees that a generic drug is being replaced by a brand name drug on their formulary. I’m not quite sure why that’s a good thing, so I did some research. Now, quick disclaimer: I’m not a doctor or a pharmacist, so none of this should be considered medical advice. I’m just a lowly benefits advisor trying to figure out all this complexity coming out of BCBSNC.
Let’s just take the first one into consideration. Flovent which is a common treatment for asthma comes in a couple of variations. When the patient takes their prescription to the pharmacy, the pharmacist can ask the patient if they’d rather have the generic, especially if it’s a lower copay or preferably no copay. Regardless of how the patient responds, there are options. However, what BCBSNC is saying here is that if you still want this generic drug, you’re going to have to go through some unnecessary red tape.
What BCBSNC would prefer you to do is just fill the new brand name drug instead. I mean why wouldn’t you if BCBSNC is going to make it harder to get the generic you’re used to (with no rebate for BCBSNC to pocket) when a more expensive drug (with a nice rebate earmarked for BCBSNC) is what’s “preferred?” I have no idea why this type of gamesmanship is not labeled as money laundering, but there have been special rules for the healthcare industrial complex for decades now. The healthcare lobby (which spends more money than anyone else) isn’t going to stop playing these games anytime soon, so you’re going to have to take this matter into your own hands.
So, based on the email excerpt above, let’s just pick Arnuity Ellipta (this is a brand name drug only — no generic equivalent) and compare to generic Flovent, and see what happens to the cost of your health plan, which exists to help your employees and their families treat the conditions they might struggle with.
Even Jiminy Cricket knows Pinocchio shouldn’t be telling lies but he has no power to make him stop.
What about the most recent switcharooni that’s newsworthy? Consider Ozempic and other semaglutide copycats that are flooding the market. Ozempic’s list price is approximately $1200 for a one-month supply. Patients taking this drug barely have to get out of bed to watch the pounds melt away. They get temporary weight loss that comes with a hefty price tag for your health plan. It also comes with significant side effects like loss of lean muscle mass, stomach troubles and more. And what happens to the coworkers who might be diagnosed with cancer or other difficult diagnoses while your health plan has been bled dry by this drug? Well, that’ll be between you and your plan administrator to figure out. It’s gonna have to come from somewhere, friend.
One simple question to ask your PBM is, “What cost controls are in place to prevent unnecessary usage of GLP-1s like Ozempic?” Don’t expect to hear much that you couldn’t have thought of on your own. An even better questions is, “what about tackling the cost of the drug at its starting point”? The traditional PBMs aren’t really interested in messing up a good thing (for them). That’ll disturb the rebates they get where you can’t see what’s happening, and you’re never going to get between a traditional PBM and their rebates. Reach for their rebates and you might pull back a nub.
The best news of the day is that not all PBMs are created alike. A few are truly interested in serving your plan and what’s in it’s best interest. That’s what Vinay Patel of MakoRx has been working on. His company found an innovative way to procure Ozempic at a fraction of the normal list price on behalf of self-funded health plans, and pair it with frequent counseling with a pharmacist who has special training in the treatment and management of type II diabetes. “Rebates create perverse formulary incentives, drive up drug costs every year, and contribute to higher patient out of pocket expense at the pharmacy,” says Patel. MakoRx, a scrappy PBA (pharmacy benefits administrator) startup, serves employers nationwide and now also provides integrated health management which sets them apart from their competitors. You see, when no rebate is baked into the cost of your drug, you can have your cake and eat it too…well, maybe just one bite if managing diabetes and weight loss is your goal.
“Rebates create perverse formulary incentives, drive up drug costs every year, and contribute to higher patient out of pocket expense at the pharmacy”
Vinay Patel, founder of Mako-Rx, a non-traditional PBM supporting health plan fiduciaries .
I interviewed Vinay for 2 episodes of Healthcare Solutions Podcast in Season 1. You can find those episodes here — Season 1 | Custom Benefits Solutions. Become a subscriber and new episodes will show up automatically on your device.
I encourage employers all over America to pull a switcharoony of their own. Change out your PBM. With the right third party administrator it’s easy peasy. You can hand pick the pharmacy benefits manager you really want to work with…one that is aligned with your best interests. If you follow Adam Fein of Drug Channels, you’ll see this post he made on LinkedIn a couple months ago about a few large employers who are doing just that. It’s pretty eye opening. More and more employers are watching closely. You should look into it too.
Here’s my punch list of prescription drug benefit features that can make the most difference for your health plan:
The preferred network of pharmacies should be the local, independent, community pharmacies where $0 copays for generics are a huge advantage for your plan members and your plan’s assets. If you include big box retailers in your network those should cost more in copays. That’s the way we designed it at Moose Pharmacy, and it helped them win a Rosie Award at the August 2023 RosettaFest. You should think about joining us for the May 2024 RosettaFest. There’s nothing like it. If you’ve made it this far reading today’s blog, I think you’d be a good candidate to attend.
No mail order. Opt instead for frequent delivery of prescriptions to employee home addresses or workplaces as needed. I know plenty of local, independent, community pharmacies that make multiple delivery trips every day. Mail order separates patients from their clinicians. No good can come from that. My colleague, Joe Moose, who co-owns Moose Pharmacy said in our presentation at RosettaFest 2023, that his delivery drivers notice important social determinants of health that his pharmacists need to know. For instance, one patient who was struggling with mobility issues had front steps leading out to where the car was parked that were totally unusable. How was that patient supposed to get out and go to the grocery store? The pharmacist helped make arrangements for food delivery and that one action made a huge difference.
Sign employees with chronic disease up for one-on-one, virtual counseling with a clinical PharmD who has special knowledge and training on those disease states plaguing your plan spend. The only pharmacies that can handle this type of request are the local, independent, community pharmacies. Some pharmacies can extend volume pricing on disease management aids like continuous glucose monitors or tobacco cessation patches, etc. Seek out the independent pharmacy closest to your office. Make their owner your new BFF.
Instead of using AWP as your starting point for drug pricing, ask your PBM about NADAC, or a cost-plus model (in other words a bottom up instead of a top-down pricing methodology). Make sure your benefits consultant can verify there’s no spread pricing or rebate gaming with any new PBM you engage with. Consider a direct contract with a local pharmacy if your workforce is centralized. A higher dispensing fee could be their main revenue source, and they could pass through their acquisition cost for the 100 most commonly used drugs. If your employees are on multiple drugs, consider a flat PMPM fee instead of a dispensing fee. It’s crucial to have a close business relationship with a local pharmacy, and have them at the table when these strategies are being discussed. In 2020, I co-wrote an article in the Journal of Managed Care and Specialty Pharmacy about a direct contract with a local pharmacy in Asheville, NC. It’s definitely unique, but it’s not a new concept.
Well, that’s certainly not all I could think of, but it’s a pretty good start. Here’s to a custom designed prescription drug benefit! If you sponsor a health plan for your employees, the ball is now in your court.
One last word on the magic behind the local, independent, community pharmacy idea. Did you know there are thousands of them all over the country? You should check out CPESN (stands for Community Pharmacy Enhanced Services Network). If your workforce is spread out in various geographies, you’ll find great resources there.
Thank you for reading my thoughts today! Please let me know if you’d like to discuss these ideas more as it relates to your health plan? Click here to email me.