The Maze of Managed Care
It seems to be getting more difficult to treat psoriasis in the past few years, even though more medication choices are available than ever before to prescribe. Managed care is in the way, a roadblock between us prescribing and our patients receiving their needed medication. Managed care seems to have not only narrowed our choices, but it also seems to have created more paperwork for us to work through to have our patients start or even continue the narrowed choice of therapy the insurance companies will let us select from.
In the 20th century, we could prescribe and our patients quickly received almost any medication prescribed. A prescription was written, the patient took the prescription to the pharmacy, and the pharmacy filled the medication. If the pharmacy did not have the medication in stock, the pharmacist ordered the medication from their wholesaler, who would get the medication in stock in a matter of days at the most. The pharmacy billed the patient’s insurance for the cost of the medication (that they paid for from the wholesaler) adding on a fee for their profit margin. The wholesaler was the middleman, who purchased the medication directly from the manufacturer and then sold it to the pharmacy for a profit.
The Rise of Rebates
About 20 years ago, some pharmaceutical manufacturers began offering coupons/rebates to patients when their doctor would give them a prescription for their product (and the corresponding coupon). The manufacturer would take up to a certain dollar amount or percentage amount off the patient’s insurance copay or payment directly when they received their medication from their pharmacy. The pharmacy then submitted this manufacturer’s coupon to the pharmaceutical manufacturer to get reimbursed for the discount. This step does take extra work on the pharmacy’s behalf, but it is very much like what they do on a daily basis with coupons for retail products.
Adding coupons/discounts, however, sometimes clouded the picture as to what the pharmaceutical company was actually paying the insurance company for a patient’s prescription. The insurer sometimes received a negotiated discount from the pharmaceutical manufacturer when a pharmacy accepted a coupon/rebate (in addition to capping the patient outlay for the product). While the patient’s copay outlay and the before discount retail cost for the prescription was known, the exact amount the insurer paid for the remainder of the prescription’s cost was unknown.
With the rising popularity of costly biologic medications in the 21st century, the tried-and-true formula of pharmaceutical manufacturer to wholesaler to pharmacy to patient became more expensive for stakeholders. Insurers were asked to pay much more for medications then they were used to and local pharmacies would have to spend a lot of money to purchase and store biologics in their pharmacies. Everyone began looking for ways to reign in the high costs for paying for these new very expensive medications. Thus, the specialty pharmacy was born.
Specialty pharmacies became the new middleman that replaced both the wholesaler and the pharmacy in the original pharmaceutical manufacturer to wholesaler to pharmacy to medication to patient format. Insurers, who preferred not to waste their resources by spending time negotiating rebates and discounts for these expensive medications outsourced to these new pharmacy benefit managers (PBMs) to negotiate rebates on their behalf. Or sometimes insurers created their own PBMs to try and negotiate prices for these expensive medications. PBMs created “utilization management” to help try and control costs for expensive medications. Techniques of utilization management include prior authorizations, step therapy, and quantity limits.
Prior authorizations require a pharmacist to review the physician’s prescription for “proper” utilization. With step therapy, the PBM requires patients to try and fail lower-tiered medications prior to coverage of a requested agent. Lowered-tiered medications are the ones that cost the PBM less money to procure. Creating quantity limits allows the PBM to place a cap on total medication use, thereby saving them money on a patient.