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Pharmacy Benefit Managers and the Influence on Cancer Care

February 2015, Vol 5, No 1
Dawn Holcombe, MBA, FACMPE, ACHE
President, DGH Consulting, South Windsor, CT

I was disturbed recently after reading a news report in which the head of a large pharmacy benefit manager (PBM) stated the company’s intentions to eventually start influencing the price of oncology drugs as well as extend its management, oversight, and influence to cancer drugs administered in doctors’ offices and hospitals. Meetings have already begun with top oncologists, according to the company leader who was interviewed, and the company is looking to find ways to eventually guide doctors toward preferred drugs in the PBM’s approved formulary in ways that do not cause patients to be upset.

These steps—indicative of a growing trend for entities outside of the oncology space to take control of oncology spend—portend a sea change in control and influence over the oncology space. So why should practices, physicians, patients, and cancer centers be concerned about what appears to be an approaching battle between drug manufacturers and PBMs?

  1. There is a new move toward managing medical care. PBMs are very interested in offering services to their customers (employers and health plans) to manage all of oncology, whether billed through the pharmacy benefit or the medical benefit. Such services would position PBMs as an arbiter of care choices between the payer and the treating physician and his or her patients. What experience and skill sets related to the comprehensive management of oncology qualify a PBM to manage board-certified oncology physicians?
  2. Medical oncology management involves far more than drug choices. PBMs are not equipped to manage medical oncology and should not be the arbiters of oncology treatments prescribed by board-certified physicians. Drug formulary decisions for patients with cancer should be evaluated with input from practicing oncologists, and the utility of the drug should be given greater consideration than its cost structure. Even drugs in the same class have different side effects and mechanisms of action. Only the treating physician has direct access to patients, their records, and their health status, and can make the best decision for the patient.
  3. Narrow drug formularies can be pennywise but pound foolish for complex cancer treatments, and patients and health plans/employers will pay the price, whereas PBMs benefit from drug limitations based on bidding wars. Mandating the use of only 1 drug option that is selected from a discounted bidding war may yield financial benefits for a PBM, but will also likely cost patients and health plans/employers more for laboratory tests, emergency department visits, physician services, and increased side effect management, or even reduced effectiveness compared with a drug that is not on the accepted formulary.

There is no denying that we currently enjoy significant improvements in the battle against cancer, and that pharmaceutical advances have played a major role. There is also no denying that there is only so much money available to pay for healthcare, and that choices are and will continue to be made for all diseases. There is already great pressure on the pricing of cancer drugs, and that pressure will continue.

When developing a formulary, however, the focus of third-party administrators of pharmaceuticals is ordinarily on the price of drug A versus drug B, not on the total cost of cancer treatment. When facing the complexities of cancer care, it is imperative to stay focused on the larger picture. Accessing appropriate treatments for complex patients with cancer when formularies are built with such a narrow focus will be difficult at best, potentially leading to adverse consequences for the patient, as well as greater overall costs.

Physicians see the patient, know the patient, and know the parameters of health status, family and work concerns, and psychosocial aspects of the patient and the patient’s caregivers. Medical benefits address the total costs of care and the fit of specific drugs within the whole con­tinuum of care. Pharmacy benefit management focuses on the drug. Management of medical benefits and pharmacy benefits are simply not interchangeable.

What can practices do? Engage local employers and health plans in discussions about oncology management. Review your own processes for cancer management and drug selection: are there opportunities for improvement that do not adversely affect the patient and can be managed better by your practice? Inform your state societies about this as an issue to watch and address. Engage the pharmaceutical companies with whom you work. The total cost of care is indeed a societal problem, and one that is hitting all of us right now.

Contracting and pricing negotiations will continue to happen. However, if and when such negotiations by third parties affect patient access and safety, and can lead to unintended financial, health, and medical consequences, the medical community should, and will, be heard.

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