Market Access: Employers as Barriers to Value

Renewed education efforts on the part of employers are slowly helping them regain control of coverage decisions in their dealings with pharma. Will it translate to cost savings for employees along the healthcare value chain?

Pharma’s relationship with employers over the years has had an on-again, off-again dynamic. Seen as key decision-makers, employers once drew the attention of pharma in the way of direct sales teams that would call on companies to keep plan creators informed.

Over the past 10 or so years, however, a number of factors have pulled pharma away from engaging employers in a meaningful way. As a result, the lack of employer education has become a barrier to market access, and the industry is now recognizing a need to revisit its old way of doing business.

Key influencer

Though pharmacy benefit managers (PBMs) existed long before this retreat, it is fair to say they helped shift pharma’s focus away from employers. As PBMs grew more powerful, pharma turned its attention to creating strategic accounts with them. They were convinced their organizations needed strong relationships with PBMs, because these entities ultimately controlled the employers.

“Employers gave responsibility to payers and PBMs to make coverage decisions, but I think it was also partially pharma trying to streamline their field presence across all sales teams,” says David Dierk, co-president of Aventria Health Group.

The loss of direct influence and manpower needed to address the sheer number of companies ultimately pushed pharma to reallocate resources and exit the employer space.

Hidden agendas

As pharma shifted its resources toward PBM engagement, a downside that emerged was that employers’ information became mainly sourced by PBMs and consultants, which often have PBMs’ interests at heart.

“Many employers are completely reliant on their consultants and PBMs to direct their employee health benefits,” says Kimberly Westrich, vice president for health services research at the National Pharmaceutical Council (NPC). “The result is that employers don’t always know if their plan design is aligned to their own

Kimberly Westrich

priorities and goals for their employees.”

Many employers don’t even realize how consultants make their money. They aren’t aware that there’s often a per-claim catch to PBMs.

As one industry insider explained, oftentimes, consultants will tell an employer that they will take its business out to bid to the PBMs at no cost to them. What they fail to explain, the insider claims, is how they plan on getting their money. While the employer may assume the cost is absorbed in some sort of service fee they will pay, what really happens is that the consultant approaches the major PBMs with an offer to give them the large employer client. However, to qualify for the request for proposal (RFP), the PBM is asked to agree to pay a certain amount-maybe 50 cents-for every claim that goes through on that employer client over a specific period of time. As a result, some of the consultants’ revenue model is from the PBM side, versus from their clients.

This lack of transparency is concerning, experts contend. Without fiduciary obligations, the loyalty of both PBMs and brokers is in question, and employers’ best interests become suspect. This limited knowledge can affect a company’s decisions, which ultimately can be detrimental to patients.

“There is a lack of understanding and education regarding where the true costs lie with specialty medicines,” says Kollet Koulianos, senior director of payer relations at the National Hemophilia Foundation (NHF). “Most PBMs don’t share data showing how cost-shifting strategies lead to non-adherence, when those strategies are used to direct exclusive business to their wholly owned specialty pharmacies. [When someone] is giving advice, or directing benefit design while being conflicted, there is a real risk for a much higher total cost of care.”

As employers express their dissatisfaction in the value of their current healthcare investment, the market seems to be shifting once again, however. “[Employers] are assuming more and more direct responsibilities in select areas of high cost to make decisions relative to access rather than leaving it in the hands of payers and PBMs,” says Dierk. “You’re starting to see pharma, once again, increase its field team presence calling on employers, because the employers are beginning to take back control.”

Pharma’s role

Innovative employers are looking to foster new relationships as they begin to regain decision-making over their healthcare spend. To meet that need, about half a dozen large pharma companies have newly dedicated employer sales forces. As pharma makes a move back into the employer space, its focus is also being renewed,

Sidebar: Emergence of Employer Coalitions; click to enlarge

with those companies undergoing the shift more focused today on supporting high-cost specialty product segments.

“Whether it’s hemophilia, or multiple sclerosis, or oncology, those are some areas that are more likely for pharma to put employer field forces in place,” says Dierk.

Other ways pharma can educate employers is by:

• Working with jumbo employers directly.

• Working with employer coalitions (see sidebar) as a way to reach smaller companies.

• Providing white papers and other information that might help employers ask questions.

• Helping medium and smaller companies adopt best practices.

• Generating data that’s relevant to employers/work site.

Education from within

As employers look for ways to take things on themselves, there are several ways they can help grow their knowledge, even without the help of pharma.

Some companies are hiring experts whose business model is to review PBM contract and spend.

• A number of transparent and fiduciary PBMs are beginning to emerge.

• Larger employers might demand a direct contract for rebates, versus allowing PBMs to do that.

• Jumbo employers are hiring pharmacists and medical directors to start tackling access decisions in-house.

Some employers also are becoming more active in directly engaging with PBMs. “Employers need tools to more proactively engage and partner with their PBMs and consultants for benefits that serve the needs of their employees,” says Westrich.

NPC seeks to educate them by offering a number of resources to evaluate the approach taken by their PBMs and consultants. The organization also offers research highlighting perspectives on the employer/PBM relationship and ideas on how employers can play a more active role in driving value in benefit design.

Understanding drivers

As employers look to save money, they should become better informed about their specific disease cost drivers. According to Koulianos, 1.2% of the population accounts for approximately 31% of all healthcare spend. Meeting with specific disease organizations can provide companies with a better understanding of their cost drivers and help them develop strategies to manage their total cost of care with optimal outcomes.

“[Every year,] Sun Life puts out a catastrophic claims report identifying the highest-cost claimants,” she says. “If you couple that with data shared by the National Business Group on Health saying 78% of employers plan to focus their efforts on high-cost claimants, then that’s where the connection will really be valuable.”

NHF is working with pharma to improve communication. In 2014, it started the Comprehensive Care Sustainability Collaborative, which brings together payers and providers to help drive value-based dialogue and help mitigate risk when it comes to high-cost claimants.

For conditions that are considered cost-drivers, employers could help patients connect with rare disease organizations or hold lunch-and-learns, for example.

David Dierk

“If you have an unhealthy workforce, and you can’t deliver the labor that you need to produce the product, then the cost truly skyrockets,” says Dierk. “The whole idea is to have aligned objectives so that the right decisions are being made that positively affect that employer’s business model.”

 “It has been said that employers are one of the only stakeholders that have a vested interest in the whole person,” adds Stacey Richter, co-president of Aventria Health Group and QC-Health. Richter is also host of the podcast Relentless Health Value.

Source of change

Which employers will be the ones to lead this healthcare reform effort? Our industry insider believes tech companies could help pave the road, with their large number of employees, technological know-how to disrupt traditional models, and appetite to infiltrate a new space to create change. Manufacturing might also play a big role. Due to a population of older workers and the physical nature of the business, drivers such as musculoskeletal spend could force them to the forefront of change.

“If you look at jumbo employers-Boeings and Caterpillars and Disney and those types-they have much greater masses, and in some cases they have much greater healthcare spend,” says Dierk. “So while I say, yes, tech could be an opportunity if you’re trying to be innovative and an engaged patient, if you’re trying to hit large, high-cost, high-need, chronic patients, that might not be the first place to go.”

Time to act

Employers are slowly but surely recognizing the need for change, and pharma’s support is imperative. The industry can start by helping to reform the supply chain, including how PBMs contract with employers, in order to push the savings farther downstream. If pharma can stop the value from being eaten up in the middle and

Stacey Richter

pass it on to employers directly, employers then could lower the amount of cost-sharing that their employees
have to bear.

According to our insider, there was a time when pharma might say it would like to distance itself from PBMs quietly but not publicly. However, that has changed in the past 18 months. The industry has started to shame aspects of the PBM business model, and pharma has a growing interest in pushing their concession down to the patient.

As drug manufacturers embark on this journey, they face the major hurdle of earning back employers’ trust.

“There are a lot of opportunities for pharma to collaborate that can be win-win, but it needs to be authentic,

Sidebar: Employers Reevaluating HDHPs? click to enlarge

with a real understanding of the needs and opportunities and options from the employer standpoint,” says Richter. “Pharma is probably in the best position ever to really start to work with employers to improve the clinical journey, improve patient outcomes, and at the same time make good on their promise to lower long-term cost.”

Pharma can also build trust through example. “When you bring something out to employers, be prepared to have a discussion from the perspective of the pharma manufacturer as an employer itself,” says Dierk. “If you can speak from their point of view, even experientially, to say we’ve educated our employees, we’ve created support services to get better patient outcomes in this particular area, that goes a long way.”

Elaine Quilici is Pharm Exec’s Senior Editor. She can be reached at equilici@mmhgroup.com