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