Q&A: PBM evolution

The health and pharmacy marketplace is undergoing rapid and fundamental transformation. To navigate profitably in tomorrow’s complex and shifting healthcare system, the pharmacy benefit management industry — along with the pharmacies and health plan payers allied with PBMs — are going to have to change and adapt as well.

Enter Catamaran, the nation’s fourth-largest and fastest-growing PBM and manager of more than 250 million prescriptions a year on behalf of 25 million members. Built from the merger of SXC Health Solutions and Catalyst Health Solutions, Catamaran is forging a new, more holistic business model for the PBM industry. Its market strategy is based on a more flexible approach to serving different kinds of health plans and payers, a sharper focus on individual patients and their specific needs, and a determination to align its broad menu of services with the health system’s massive shift from a fee-for-service model to a more cost-effective approach, based on successful patient outcomes, reduced hospitalizations, prevention and better management of chronic diseases.

To that end, Catamaran has pursued an aggressive course to align its business platform with the new health paradigm. Last fall, it launched a new specialty pharmacy brand, BriovaRx, to deliver more personalized, holistic care to patients with complex conditions and help payers and health plans manage costs more effectively – earning it specialty pharmacy accreditation from URAC. Recently, Briova also added a mobile application to connect specialty patients more easily with information, resources and a patient-support network. The company has also opened Centers of Excellence around the United States to support local health initiatives and promote cost-effective, personalized solutions for payers and patients. Those efforts earned Catamaran a five-star quality rating from the Centers for Medicare and Medicaid Services.

Recently, DSN spoke at length with two Catamaran executives — Albert Thigpen, SVP pharmacy operations and industry relations; and Sumit Dutta, SVP and chief medical officer — about the PBM’s new approach to managed pharmacy care and the changes driving that strategy. Here are excerpts from that interview.

Drug Store News: Reducing costs and providing a more effective, integrated and outcomes-oriented brand of patient care is critical to the future of the U.S. health system. Talk about how that system can evolve to provide a smarter, more cost-effective level of care, and what role companies like Catamaran can play in that search for new solutions.

Thigpen: We’re offering a scaled alternative to the biggest PBMs in the marketplace. One of them is heavily predicated on traditional PBM architecture … where the driver of the product offering becomes mail order, and bringing as much in-house as possible to drive their economics and scale. And the other [PBM] is very affiliated with a retail chain, which is all about the retail business model in general.

With us, we have been very successful in bringing in a lot of new business with  companies like Target … through our flexibility. It’s around creating tailored solutions, not about dictating that [a client] needs to add mail order to their pharmacy benefit plan design in order to get this or that cost of goods, or creating a narrow retail network to drive that business. For us, it’s about creating customized and flexible solutions that are best suited for that particular client.

Dutta: There are macro trends that play well to the positioning of our company. Take drug development for example. In the ‘60s, you had drugs like penicillin that essentially impacted all or most people. We’ve moved into [specialty] today, which is the primary driver of new product development, where you’ve got new therapies for narrower and narrower diseases. Then we have the promise of individualized therapies and personalized medicine. We’re moving toward that.

At the same time, we’ve had these changes in health policy converging along similar lines, with healthcare exchanges that’ll focus on individual markets, patient-centered medical homes and even [accountable care organizations], where patient outcomes drive how payment models will work in the future. We’re moving from a world where other large groups were making decisions for health care, down to individuals taking responsibility over that care themselves.

So we at Catamaran need to be flexible, and we need to focus on the patient, wherever the patient chooses to engage. It could be in specialty, in a retail chain environment, in the mail service environment. It really doesn’t matter. The goal is to improve the patient’s outcome at the lowest possible cost.

Sometimes that’s going to be through the traditional methods of drug utilization management to reduce net costs. And other times it’s going to increase a payer’s costs in the near term, because the patient will need to be on a drug that’s going to make their health better. But that will decrease overall health costs in the long term through a reduction in medical services.

DSN: Can you give a specific example of how you engage patients across multiple formats?

Dutta: In our [medication therapy management] programs, if the patient wants to engage us in a retail setting, we have created a network of over 18,000 pharmacies, where, for example, we take our insights on the gaps in someone’s care, and push that out to those pharmacies so that the pharmacist can have a discussion with those patients.

It’s not forcing the patient into any specific venue. We’ve got broad coverage with chains and independents, and multiple venues out there where that can happen. And if the patient prefers to handle things on the phone, we have a call center to allow for that. And if the engagement doesn’t work in the retail environment, we can follow it up with a superimposed call center approach.

That’s why we invest in things like mobile applications to communicate with people. We’re going to employ those channels as people adopt those technologies.

DSN: Do you look for certain capabilities or criteria pharmacies have to meet to be part of your provider network?

Dutta: The important thing about putting a network together is variety. We want to give the patient options, and not limit them to a specific location. As for how we select pharmacies, we’re a very metrics-driven company. So we look for the success rates of each of our pharmacies in communicating with their patients. We work together with them as partners to figure out how we can increase communication.

DSN: How do you develop those metrics? Do you align with the goals of the payer or client, in areas like tracking evidence-based outcomes, etc., or apply some standard metrics to every pharmacy provider?

Dutta: We’re flexible. Payers approach these situations individually, and we’ve built our model around … what our payers are asking for … and developing metrics in partnership with them.

Thigpen: We’re seeing a lot of activity around the specialty part of the house, determining what is the best channel to manage certain patient populations or certain drug distribution reporting and economics relative to the channel. It may involve limiting the network or working with very specific specialty pharmacies within that network to create a standard and benchmark and reporting capacity, and more importantly a pharmaceutical care management model that’s consistent across the board.

DSN: When you contract with a payer to provide PBM services, is the specialty component of that contract exclusive to Catamaran and its BriovaRx specialty division? Will that serve as the specialty component for all members of a plan, or will you continue to contract with other specialty providers?

Thigpen: We have a litany of technology products and services we deploy that clients can choose from, and Briova is part of that product offering, with 11 specialty pharmacies across the [country]. So if a client has a need for specialty pharmacy services, we have a very robust, differentiated product we can sell that client.

However, there are clients that have very unique needs and very different models that we can customize and tailor our offering to. For example, if we have a mass merchandiser or grocery chain that owns their own pharmacies, and wants to build something different, we would entertain that whether Briova is co-positioned or co-preferred with those pharmacies. It could be a hybrid model where we may take on the entire back-end work for them, and help them be more educated in specialty so they can keep their constituents in their own pharmacies and stores.

Dutta: Our model isn’t ‘you use us way we want you to use us.’ We say, ‘This is how we do it best, but you can do it any way you want to, and we’re going to make sure your patients are taken care of.’

DSN: Are you also positioning Briova as a stand-alone specialty pharmacy, independent of the Catamaran PBM offering?

Thigpen: Briova could be the specialty pharmacy offering for other PBMs that are not clients of Catamaran today. We can tell clients, ‘You can keep your PBM, … but let’s move the specialty over to a more robust and differentiated model.’

DSN: Briova puts a lot of emphasis on integrating with all the different constituencies, and aligning the interests of the payer, provider and patient. Do you consider that a differentiator?

Thigpen: What we’re striving to do first and foremost is personalize pharmaceutical care in Briova. For example, if I had 10 newly diagnosed [rheumatoid arthritis] patients, and they all had Humira as their starting dose, all 10 of them are going to respond very differently, with different behavioral attributes, financial considerations, co-morbidities and other drivers that are going to influence how that drug performs.

And if you cannot build a model that is very personalized and tailored for each individual, you’re going to be unsuccessful at creating value out of that pharmaceutical with respect to the care it’s designed to deliver. So we have to have engaged clinicians and a lot more behavioral information and engagement with the patient to be successful.

How many specialty pharmacies are looking at the entire patient and personalizing that care model to get the most out of the regimens that have been prescribed? That’s the difference in our model.

DSN: How do you tie that to a lower-cost message for payers?

Thigpen: Cost containment and cost management is the price of entry in this arena. Everybody’s going to have to perform on that. We have to put ourselves in the middle of a hub-and-spoke model that connects the physicians who are prescribing the care for the patient … [including not only] the rheumatologist, but also the general practitioner, or the psychiatrist treating the depression. We create a feedback loop with the providers … [as] the patient’s pharmaceutical care advocate. We’re also connecting to the payer ultimately reimbursing all those products, and asking, ‘Are we creating a better outcome by connecting the pharmaceutical care, personalized nature of this experience and trying to create a healthier, more vibrant life for those individuals?'

It’s also about making sure manufacturers are getting complete visibility … on why a drug does or doesn’t perform, given all the factors like affordability, accessibility, behavioral issues and general daily life issues that come into play.
It’s our job to connect that and help influence manufacturers’ thinking on what we can do better to promote … the value of that pharmaceutical. And in the end, if we do our job with those three, where we become the hub of the payer, the providers and the pharmaceutical companies, we can’t help but have the information to engage the ultimate consumer to be a more empowered individual who take control of their health care.

DSN: This requires educating the different constituencies, and getting them all on a platform where the outcomes data … impacts the behavior of manufacturers or providers, bringing everyone into this outcomes-driven model.

Thigpen: You’re absolutely right. Any time you inject disruptive innovation into an existing model, it takes time for it to gain traction. It’s like when Netflix came into an industry dominated by Blockbuster. Over time they completely revolutionized how the movie and entertainment industry to the consumer was managed. But it took years for that model to evolve. And health care is going to be no different. We will continue to support our cause, and to educate the key constituents. And we will over time influence them.

DSN: The reimbursement system is already beginning to change with CMS basing a small but growing portion of payments on reduced hospitalizations and other outcomes metrics. But do you think the payers, both public and employer-based health plans, are on board with this vision of a more integrated and evidence-based model, and this shift away from fee-for-service medicine?

Dutta: I do. On the managed care side, you’re already seeing experimentation among the innovators and first-movers. Some clients, for example, are already creating provider contracts that pay for the value that leading-edge pharmacies bring to the table. But everyone doesn’t move at once.

DSN: How do you assure that the pharmacies participating in your provider network meet the service standards and provide the level of MTM you’re trying to provide clients?

Dutta: We do something a little different. We understand the pharmacists in the field are busy. So our central area prepares the work, rather than just identifying the patient and having the pharmacist figure it out. We prepare the comprehensive medication review structure. And we know as a result of that that there’s consistency in the network around other services that we provide. Then, we measure success rates, and, third, we follow up with the call center when the network isn’t successful.

DSN: More and more of the market is shifting to specialty. How do you see managed care evolving to accommodate that shift, and the move to a more patient-specific kind of drug therapy, without losing the ability to provide the cost savings payers are looking for?

Thigpen: We will influence how the industry evolves by tailoring the product offerings to the markets that we serve. You can’t have a one-size-fits-all model in health care. Health care is delivered locally and personalized in nature, and that is a foundation that needs to resonate across the board, from a provider to a pharmacy.

However, a labor or union group in the auto industry is going to behave very differently than a Target with thousands of employees across the country. And very differently than a Blue Cross Blue Shield of Rhode Island. Or from a large national plan like a United or Cigna or Aetna or Humana.

Furthermore, within those plans, the Medicare Part D population will respond very differently than the commercial public population. And you cannot expect to influence or build convergence of an industry shift unless you know how all of them are going to behave. But once you understand how all of them are going to behave, then you can begin to start identifying the needs, the things that resonate between all the constituents.

Where we feel very strongly about our influence in the industry, particularly going forward, is that Catamaran has the broadest set of flexible clients that gives us complete visibility into how the market overall is going to behave. The healthcare industry we serve in the pharmaceutical management space is ripe for change. It’s been purely driven on cost and economics, and pharmacy has become commoditized and transactional in nature. That is bad for patient care. So let’s unravel it, get at the root causes of why it happened, and build a model that is personalized in nature.

There will still be commoditized, transaction-based pharmacy care, with options for maintenance meds, mail order and plenty of generics. But when you think about the pipeline of drugs coming out of the Food and Drug Administration, most of it’s specialty. And the vast majority of that is oncology in nature. Pharmacy needs to evolve to manage that.

No one has the exact picture of how health care is going to look in the future. But we think we’re pretty close to it, because we’ve invested heavily in that. And we want to be the disruptive innovators that get us to that future.