Magellan Rx has been a market leader in developing forward-thinking solutions to combat rising specialty spend on the medical benefit for nearly 20 years. With a passion for solving complex pharmacy challenges, such as biosimilar management, we roll up our sleeves and tackle what is truly driving trend while ensuring a high quality of care for the members we serve.

Building on the success of our industry-first medical pharmacy program, including management of medical benefit oncology drug spend, we began to focus on advancing biosimilar utilization in 2015. Our goal was to empower health plan customers with education and strategies that turned biosimilar availability into cost savings while maintaining clinical quality. From the high-cost autoimmune category to oncology and beyond, our philosophy to biosimilar management involves three key components:

• Proactive Management: Assessing and developing clinical protocols while educating and communicating with network providers
• Medical Pharmacy Execution: Leveraging Magellan Rx’s innovative medical management expertise by incorporating biosimilars into key utilization management programs such as medical prior authorization and provider reimbursement/fee schedule management
• Expert Opinion: Continuously working to gain insights from our advisory board of specialists and Expert Clinical Network of key opinion leaders

But first, what is a biosimilar?

According to the U.S. Food and Drug Administration (FDA), a biosimilar is a drug type that is highly similar to an FDA-approved biologic, or reference product, with regards to its purity, molecular structure, and bioactivity. The biosimilar approval pathway starts with an application submission that includes analytical studies, animal studies, and at least one clinical study. A biosimilar is approved by the FDA after evaluation and testing to show it is as safe and effective as its reference product.

As of April 2021, there are now 29 FDA-approved biosimilar products across three different categories—20 have been launched to date, and 18 are oncology or oncology support.

Magellan Rx’s approach

In 2015, ahead of the first biosimilar approval in the U.S., our work began with a committee of experts to review the biosimilar landscape and potential impacts for payers. By 2016, we had established our first biosimilar-over-reference policy on the medical benefit, and in 2017 additional clients opted into the strategy with more growth in biosimilar savings.

The program was expanded in 2018 to include infliximab—the biosimilar for Remicade, a top spend drug used to treat autoimmune conditions such as rheumatoid arthritis and inflammatory bowel disease—by leveraging a comprehensive utilization management solution. As part of this initiative, our team of highly-trained pharmacists worked with physician offices and hospitals to ensure appropriate utilization for each patient’s unique situation.

Also in 2018, we established an Oncology Biosimilar Workgroup to prepare for future launches in this high-spend category (in fact, oncology and oncology support accounts for more than 40% of total medical pharmacy spend across the Commercial, Medicare, and Medicaid lines of business¹). We aimed to educate health plan customers, members, and providers through individualized strategies that consider clinical, financial, and regulatory factors. The oncology biosimilar program was launched in 2019 as oncology biosimilars hit the market, with early adopter implementation that resulted in maintaining or expanding member access to clinically-effective treatments while delivering significant drug spend savings.

Due to the success of the infliximab program and proactive approach to the launch of oncology biosimilars, we experienced a rapid expansion in 2020 as clients, representing millions of lives, began to adopt these innovative solutions. Oncology biosimilar utilization surged, and the (measured by the number of prior authorizations approved for the first two therapies with biosimilars compared to the reference brands) for early adopters. We also showcased results in research presented at the 2020 AMCP Annual and AMCP NEXUS industry events.

So far in 2021, biosimilar uptake continues to increase. Our team of experts previewed results from the oncology biosimilar program at the 2021 AMCP Annual event and spoke to The Center for Biosimilars on strategies that payers are using to promote biosimilar adoption.

Looking ahead, Magellan Rx remains committed to the biosimilar-first strategy and will continue to expand the program to include additional categories and available biosimilar agents as they are approved by the FDA. For more on payer management concerns related to biosimilars, read page 24 of the latest Magellan Rx Management Trend Report.  For up-to-date pipeline news, check out the MRx Pipeline Report. Have questions or want to implement a solution to meet the needs of your unique population? Connect with us today!

To learn more about Magellan Rx’s work, click here. 

1. Magellan Rx Management Medical Pharmacy Trend Report™, © 2021.

In contrast to the conventional drug approval pathway in which drugs are reviewed under a New Drug Application (NDA), approval of a biological product is done under a separate pathway known as the Biologics License Application (BLA). Examples of biologics include therapeutic proteins such as insulin, monoclonal antibodies, vaccines, and blood-derived products. While the NDA and BLA processes are similar, they are not identical. The typical generic drug provisions (e.g., same active ingredient, bioequivalence) do not apply to BLAs. Instead, the single biological product already approved by the United States (US) Food and Drug Administration (FDA) is referred to as the reference product; the new potential biosimilar is then compared to the reference product. For approval as a biosimilar, the manufacturer must demonstrate that the agent is highly similar with no clinically meaningful differences.

In July 2018, the FDA released their Biosimilar Action Plan, described by then FDA Commissioner Dr. Scott Gottlieb, as “aimed at promoting competition and affordability.” Then, in December 2018, the FDA announced the plan to transition biological products that were historically regulated as drugs and approved via NDAs to the biologics pathway, taking effect in March 2020. These products include insulin, human growth hormone, and glucagon, among others. This change was mandated by Congress in the 2009 Biologics Price Competition and Innovation Act, which allowed 10 years for the transition. When considered as drugs under the NDA pathway, it was virtually impossible to develop a generic equivalent due to the nature and the inherent variation in the manufacturing process of these products. On March 23, 2020, the FDA issued a statement noting that this change is now in effect.

However, in the US, even if an agent is determined to be biosimilar, it is not automatically interchangeable (a process by which a product can be substituted for another without the approval of the prescriber). For a biosimilar to be considered interchangeable by the FDA, it must meet even more rigorous requirements and be approved as interchangeable. For products that are biosimilar but not interchangeable, the prescriber still needs to write for the specific product. In addition, even if determined to be interchangeable by the FDA, state pharmacy laws may further regulate what substitutions may be made at the pharmacy level without the approval of the prescriber. Just as a listing of generic equivalents is available through the FDA in their Orange Book, the FDA lists biologics and any respective biosimilars in their Purple Book. Recently converted to an online database format, the Purple Book provides details on reference products, their corresponding approved biosimilars, and whether or not the biosimilar is interchangeable. To date, no biosimilar has been designated as interchangeable.

As described in a previous blog post, the cost of insulin has risen substantially, leading patients to take desperate measures. At a time of economic instability and health uncertainty, these access concerns are even larger. Now that these products have transitioned to the biologic approval pathway, once patent exclusivity has passed, biosimilars can be developed, evaluated, and approved. Moreover, biosimilars can be reviewed further and may be classified as interchangeable, which can further alleviate the burden by allowing substitution at the retail level depending on local laws. This landmark change can promote market competition, potentially driving increased availability and decreased cost. The FDA reports that even having one generic drug on the market can decrease prices to approximately two-thirds of the price without competition. Generally, initial list prices of launched biosimilars have been 15% to 35% lower than their reference products. Most importantly, in their announcement of this change on March 23, the FDA pledged that they are ready to review eligible applications to ensure efficient approval. Ultimately, this revised process will provide an opportunity for other manufacturers to introduce safe and effective product competition without clinically meaningful differences. While this may be challenging in light of the ongoing global pandemic, this change, 10 years in the making, offers hope for patients who use these medications.

Simply put, hepatitis means inflammation of the liver. Chronic hepatitis C virus (HCV), a blood-borne disease of the liver, is a global health concern. In the United States (U.S.), it affects an estimated 3.9 million people, up to 30 percent of whom will develop cirrhosis and 1 percent to 3 percent of whom will develop liver cancer. There are six genotypes, with genotype 1 being the most common genotype in the U.S., accounting for over 75 percent of HCV cases. Approximately 12 percent of U.S. patients have genotype 2 and 10 percent comprise genotype 3. Genotypes 4, 5, and 6 make up less than 2 percent combined in the U.S.

Historically, treatment for chronic HCV was agonizing, as it involved injectable interferon and oral ribavirin, associated with very low cure rates, undesirable safety profile, poor tolerability and a long duration of therapy. Over the last four years, HCV treatment has undergone a paradigm shift, with the approval of once-daily oral direct-acting antiviral (DAA) regimens, providing sustained virologic response (SVR) of over 95 percent, which is synonymous with cure. The approval of sofosbuvir/velpatasvir (Epclusa^®) in 2016 marked the first pangenotypic agent, as a 12-week regimen. Pangenotypic drugs work against all genotypes. These major advancements have led to a trending down in utilization of HCV treatments with fewer patients needing retreatment and have sparked the possibility of eliminating HCV at a national and even global level. Yet, there is still an unmet need. The Holy Grail of HCV research is focused on all-oral, ribavirin-free regimens, shorter duration of therapy and options for DAA treatment failures.

Two next-generation pangenotypic HCV agents are expected to be approved in August. Gilead’s investigational sofosbuvir/velpatasvir/voxilaprevir is seeking to become a salvage therapy for prior DAA failures as a 12-week regimen, pangenotypic drug for patients without cirrhosis or with compensated cirrhosis. This agent has received FDA’s Breakthrough Therapy designation for patients with genotype 1 who have failed prior DAA therapy, specifically containing NS5A inhibitors. Breakthrough Therapy designation is given to drugs that can treat a serious or life-threatening condition and preliminary evidence suggests that the drugs may demonstrate substantial improvement over available therapy on a clinically significant endpoint. This designation helps expedite the development and review process. The Gilead product is taken as one tablet once-daily.

Glecaprevir/pibrentasvir, Abbvie’s emerging HCV pipeline drug, may be approved as a shorter eight-week regimen across all genotypes, in non-cirrhotic patients. For patients with genotype 1, it has received Breakthrough Therapy designation for those not cured with prior DAA therapy. This Priority Review product has also been studied in difficult-to-treat populations with high efficacy. An FDA Priority Review designation is given to drugs that offer major advances in treatment, or provide a treatment where none existed. The FDA goal for completing a Priority Review is six months, compared to 10 months for a standard review. Abbvie’s regimen is taken as three tablets once-daily.

This August wave of pangenotypic options for HCV should further drive competition and access in the marketplace. They can lead to a cure in larger populations with shortened durations and treating difficult-to-treat patients, including prior DAA failures. These continued advancements in turn make the quest to achieve national elimination goals a viable possibility against this national epidemic.

Magellan understands that the market looks at pharmacy trends as a gauge to measure pharmacy benefits manager (PBM) success. However, you really can’t compare one trend number to another as every PBM uses different methodologies, different data sets and different calculations to arrive at their trend number, and often adjustments are made to these calculations year-over-year. This is something Magellan likes to call little ‘t’ trend.

Do you know what most of these trend numbers are missing? One of the largest cost drivers today – prescriptions drugs dispensed through the medical benefit – when you combine pharmacy benefit with medical benefit spend, you get what we like to call big ‘T’ Trend. In fact, you need to combine both to see that there is as much, if not more specialty spend going through the medical benefit today that is going unmanaged.

As specialty costs continue to soar the need to leverage effective management and thought-leading expertise is essential.  As pioneers in this complex specialty environment, we have dedicated ourselves to solving the challenges and creating solutions that resolve what’s truly driving big ‘T’ Trend.

Watch our video to learn more.

On March 22, Magellan Rx Management released its seventh annual Medical Pharmacy Trend Report, which continues to be a leading source for payers and other industry stakeholders to analyze high-cost injectable drugs paid under the medical benefit. It’s clear that specialty spend on the medical benefit accounts for a significant expenditure for both members and payers alike and it is continuing to grow rapidly, particularly for commercial health plans. Ensuring a sound medical benefit drug management structure is in place is necessary to rein in costs in both the short- and long-term, particularly as new drugs come to market.

This year’s report highlights the member and payer impact of high-cost specialty drugs billed on the medical benefit. Often unrecognized, but a critical component of total drug spend, this segment of drug utilization is especially important considering that by 2018, it’s expected that 50 percent of total United States drug spend will be composed of specialty medications. Additionally, half of specialty drug spend is billed through the pharmacy benefit and half through the medical benefit, or “medical pharmacy.” Specifically, the report found:

• Commercial medical pharmacy spend increased by an average of 12 percent each year from 2011-2015, while Medicare Advantage remained relatively stable with only a 5 percent increase over the same five-year period.
• The majority of oncology drugs are still infused or injected and the largest portion of their costs are covered through the insured’s medical benefit. Oncology and supportive care agents represent nearly 50 percent of commercial medical benefit drug spend and nearly 60 percent for Medicare Advantage.
• The leading cause of blindness in senior populations is treated with injections that are exclusively covered through the medical benefit, and this was the highest trending category on the medical benefit in 2015 (30 percent for commercial and 39 percent for Medicare Advantage).
• On average, the 10 most expensive commercial medical benefit drugs averaged $421,220 annually per patient and affected two per 100,000 members. The 10 costliest Medicare medical benefit drugs averaged $268,780 and affected eight per 100,000 members.
• In total, taking into account coinsurance, copay and deductible, members using a medical benefit drug paid 3 percent of total medical pharmacy costs in commercial (97 percent for the payer) and 5 percent in Medicare Advantage  (95 percent for the payer). While the member percentage may seem small in comparison to payer percentage, many members have trouble affording their medications or reach their maximum out-of-pocket costs, oftentimes at thousands of dollars.

Key strategies for the effective management of medical benefit drug spend outlined in the report include:

• Clinically and operationally managing drugs billed with unclassified Healthcare Common Procedure Coding System codes;
• Improving claims system capabilities to capture and report National Drug Codes;
• Employing provider network strategies for commercial members to remove disparities in cost by outpatient site of service;
• Implementing benefit design strategies, and
• Bringing transparency of medical benefit drug costs and therapeutic options to members.

Building an effective medical benefit drug management strategy requires an in-depth knowledge of and expertise in this complex area, but it’s essential to help payers rein in costs and improve the quality of care for members.

Download the full report to learn more.

Magellan Rx Management is hosting its annual Specialty Summit from August 28-30, 2017 in New York City. This premier event provides insights, innovations and solutions for some of the pharmaceutical industry’s hottest topics.

DO YOU HAVE A STORY TO TELL?

If you have compelling research or new ways to drive innovative thinking that can help solve complex specialty pharmacy challenges, we want to hear from you! Magellan Rx Management is accepting proposals now through March 13.

Click here to submit your story, and learn more about the Specialty Summit here. 

Uncertainty is the name of the game for many industries today, including healthcare. With rapidly emerging technologies, regulations and changing consumer demands, companies must manage differently in order to keep up. Jeff Dyer, innovation visionary and co-author of the highly acclaimed, The Innovator’s DNA and its follow-on publication, The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators highlighted the threat to many companies today – predicting that 50 percent of the S&P 500 will be replaced over the next 10 years.

Human-Centered Innovation

As consumer experiences across nearly every industry become more personalized, on-demand and targeted, he encouraged pushing our thinking beyond meeting functional needs by looking at social and emotional ones as well. By doing so, companies are able to identify unmet needs that can be catalysts for more useful solutions that ultimately win in the market.

The GE Adventure Series Scanner, an MRI scanner designed for children to make scanning a less frightening experience, was a prime example shared of human-centered innovation. While advanced in functional features, what was discovered through observing young patients getting a scan was that the former machine was intimidating – the designer learning that as many as 80 percent of pediatric patients had to be sedated in order to sit still long enough for the scan.  Witnessing this, a new approach was taken, ultimately applying human-centered design methods to redesign the experience as a series of “adventures” for children, delighting and no longer scaring its young users.

The Big Picture in Quality Care

While human-centered innovation can be applied product by product and interaction by interaction, we heard another thought-provoking point from the day’s presentations – that it’s really hard to detect poor quality care through one interaction. The path to a poor outcome most likely includes bouncing from doctor to doctor and breakdowns in coordination and communication between interactions. Often, the big picture reveals the flaws.

The reality today is that many people still get prescriptions from multiple, independent physicians, and many hospital admissions come with undiagnosed behavioral health concerns. The healthcare system has an immense opportunity to come together around the whole patient and to better identify needs at a population level to deliver on value-based care that leads to healthier outcomes.

Physician Collaboration

Our physician panel sparked further ideas in how to collaborate with PCP’s, nurses and other care workers to better meet patients’ needs. Often at the front lines of the patient experience, creativity in finding unidentified needs was discussed as pivotal to creating an effective healthcare experience. While concepts of self-directed, consumer-focused healthcare and increasing consumer participation in healthcare decisions have become popular, the role of physicians is also being transformed. Their responsibility is increasingly to supplement and put into perspective available information, manage expectations, and instill confidence. The discussion thus encouraged leveraging physicians as “natural, trained problems solvers”, bringing them into the ideation for a better patient experience, and empowering them with action-oriented data and decision support along the way.

We thank all of our leaders, clients and partners for joining us in a memorable and energizing event. We look forward to our next gathering in January 2017.

**The following blog post was co-authored by Dr. Maria Lopes, chief medical officer of Magellan Rx Management, and Dr. Karen Amstutz, chief medical officer of Magellan Health.

Value is more than a buzz word among health care stakeholders, but stakeholders – payers, providers, patients and pharmaceutical manufacturers — define value differently, based on their needs, obligations and roles within the evolving healthcare and managed care paradigm. Each stakeholder, while looking out for its unique interests, must also consider how its priorities, perspectives and business model affect the others — their counterparts, and in some cases, partners. Payers are a common thread intertwined within this continuum of healthcare services, interfacing with each stakeholder in a significant, although different manner. As they navigate the changing managed healthcare marketplace, payers must proceed in a manner that protects their interests, even as they give consideration to the impact their strategies and initiatives may have internally and upon other healthcare stakeholders. One unique opportunity for payers exists within the management of prescription drug utilization, specifically in assessing and refining expectations surrounding their pharmacy benefit management (PBM) services and relationships, and how these translate into value for payers and ultimately, all healthcare stakeholders.

Historically, measures of success in the PBM industry focused on leveraging volume as a means of managing drug costs. PBMs demonstrated value by offering what are now considered standard, or core services. Typically these offerings consist of claim adjudication, utilization management, mail order, customer service, some clinical support services, and of course, financial support in the form of volume-driven rebates and discounts. Times have changed as the Affordable Care Act (ACA), increasing government regulation, rising drug prices, and growing availability and demand for specialty pharmacy drug products have profoundly impacted the use, costs, and management of prescription drug therapies within the managed healthcare marketplace.

Accordingly, expectations surrounding prescription drug benefit management among stakeholders have been, and will continue to be, profoundly impacted by the shifting healthcare environment. Specifically, as payers seek to provide patient or member support, access to care and expanded services, while maintaining profitability, they are reassessing business models and relationships. For payers, this includes taking a close look at the manner in which prescription drugs are managed, giving consideration to the clinical and financial impact of specialty drug spending, in particular. In response, payers are increasingly looking to PBMs to refine their services, with an eye toward driving outcomes. It is no longer sufficient for a PBM to provide products at a discounted price. Essentially, payers are looking for PBMs to provide “value over volume.”

Challenges Facing PBMs

This evolution in payer expectations of PBMs is highly driven by the pressures of rising prescription drug costs — particularly specialty drug spending. Make no mistake about it, volume-based savings remain a significant facet of PBM and payer relationships, but they are no longer the key financial objective of payer- PBM agreements, as they once were.

PBMs are now challenged to stretch beyond their traditional scope of offerings to provide the services payers expect — they are tasked with providing and demonstrating value. What is value and how is it defined in the PBM-payer relationship? First and foremost, PBM-payer relationships moving forward must be partnerships in order to successfully navigate these formerly uncharted waters. It’s not sufficient for a PBM to provide expanded services, such as clinical programs, in name only. Successful implementation of these initiatives will require tomorrow’s successful value based PBMs to have an innovative culture, a modular and flexible service model, and a platform utilizing leading edge technology. PBMs capable of providing adequate support to payer partners must actively integrate and apply clinical expertise into programs that support improved patient outcomes and consider patients comprehensively, while giving appropriate consideration of unique patient needs — and offering comprehensive solutions, which may include unique program components, such as integrating behavioral health support as warranted.

Clearly, the PBM of the future must have a new orientation – no longer focused exclusively on volume-based strategies. Tomorrow’s value-based PBM must provide value by looking beyond the current silos that commonly focus upon pharmacy drug benefit approaches that apply “traditional“ utilization management strategies (step therapy, prior authorization, etc.) to maximize rebates and manage prescription drug spending. Effective management of the future must bridge the management of prescription therapies, particularly specialty drugs, via either the medical or pharmacy benefit. Applying innovative strategies to optimize management of the use of and administration of prescription drugs through whichever benefit, medical or pharmacy, the therapy is processed will be an essential attribute of PBMs’ demonstrating value to payer partners. Focus upon coordination of specialty drug management through both the pharmacy and medical pharmacy benefits will only gain importance as the availability, costs, and utilization of expensive specialty therapies rises, as acceleration of specialty drug utilization is projected.

These current and anticipated shifts in the clinical and economic landscape will drive the challenges and amplify the financial importance of managing medical pharmacy spend. PBMs providing value will do so by offering comprehensive prescription drug management support for payers, across the benefit design, with particular attention to effectively managing drug utilization and spending within the medical benefit arm of the organization. As an example, Magellan Rx Management has focused on developing patient and provider engagement strategies, and employing advanced analytics and comprehensive specialty drug management programs for both the medical and pharmacy benefit.

Interpreting Data is Key

This application of advanced analytics is integral to the service and offerings of the value-based PBM of the future. It is insufficient to simply capture and possess data. Going to the next level, the ability to analyze and report data, while beneficial, falls short of having a demonstrable clinical and economic impact. Data capture and reporting alone are inadequate as a means of providing value to payers if this data is not properly evaluated, interpreted, and then integrated into effective clinical management strategies. These identified strategies must be capable of serving as a platform for significant clinical improvement and development of cutting edge programs that enhance care and manage costs, across both the medical and pharmacy components of the benefit. PBMs with an eye to the future are those capable of:

• Providing rigorous analytical support to payer data in order to help payers identify opportunities to improve outcomes, while realizing savings
• Collaboration to ensure providers have information needed to optimize treatment –promoting access to and use of the most efficacious and cost-effective drugs
• Enhanced customer-facing strategies to increase member understanding and effective utilization of pharmacy and medical benefit therapies

With data management capabilities as a cornerstone, the value-based PBM is poised to assess payer data, applying predictive analytics as appropriate to conduct a robust and meaningful cross-functional analysis of costs, utilization of therapies, and outcomes. A well-constructed and executed analysis supports both the financial and clinical objectives of the payer – financially supporting cost management while simultaneously creating an opportunity to identify and address existing or emerging gaps in care. As a result of these analyses, payers will be poised to support providers, provider groups, hospitals, outpatient treatment facilities and other partners such as accountable care organizations

(ACOs) by providing feedback regarding current clinical and economic opportunities to improve outcomes and manage costs – ultimately benefiting the patient. As one dimension of these analyses, value-based PBMs can support payers in developing targeted initiatives that address identified gaps in care. For example, programs may be developed to improve member adherence with therapy and the selection of the most clinically appropriate treatment, as they simultaneously support payer objectives such as improving the identification, recognition, and understanding of opportunities for managing trend drivers and helping to identify other areas of concern or opportunities to improve care.

With the support of value-based PBM, payers have the opportunity to expand specialty drug management capabilities, developing new clinical programs for specific disease states, with the ability to target diseases that are highly significant for each organization, either due to cost, clinical relevance, prevalence, or demonstrated gaps in care. Some examples of programs with such experience that exist within Magellan Rx Management include the clinical programs to guide the treatment of age-related macular degeneration, hepatitis C, and chronic myelogenous leukemia (CML). These programs might include clinical interventions, product preferencing and targeted clinical patient and provider support programs.

A Case in Point

For a large regional health plan, representing about 1 million commercial lives, Magellan Rx Management partnered to offer medical formulary management programs in the following areas:

• Viscosupplementation
• Botulinum Toxins
• Contraceptives
• Gaucher’s Disease

Magellan Rx also worked with this payer to implement a variable reimbursement fee schedule, with a maximum allowable cost (MAC) / least cost alternative (LCA) product selection strategy. A proprietary methodology was applied to promote generic utilization and equalize margins on products within several therapeutic classes, including intravenous immunoglobulin (IVIG), taxanes, folinic acids, ophthalmic injections, viscosupplementation, and antiemetics. Savings in the antiemetic category alone have exceeded $3.5 million since the program’s inception in 2010, by removing incentives for physicians to prescribe higher-cost, branded antiemetics, rather than the low-cost preferred alternatives.

Additionally, value-based PBMs are equipped to support payers in the development and implementation of unique initiatives, such as site of care management programs. These programs create an opportunity to administer initiatives focused on oversight and management of the treatment and administration location for certain high-cost therapies, typically administered at either a provider office or an alternative administration site such as a hospital outpatient administration facility. By encouraging the use of the most clinically, therapeutically and financially cost-effective therapy, site of care management programs offer a means of assuring treatment is administered in the most clinically and financially appropriate setting. As an example of success in this area, Magellan Rx’s site of service netted over a million dollars in savings for two regional health plans in a six-month period. The program, which also received positive feedback from patients, demonstrated the possibilities such programs have to generate savings, while improving patient access to care. Characterized as a solution which places the patient first, the program was overseen by a collaborative team of healthcare professionals, including nurses, pharmacists and physicians.

Innovative strategies, such as outcomes-based contracting, are another means by which value-based PBMs further support payer objectives. Outcomes-based contracts are a unique and customized partnership opportunity that considers stakeholder interests by giving consideration to payer-specific data, supported by robust analytics to define opportunities for optimizing clinical and economic outcomes in the best interest of all stakeholders.

Additionally, value-based PBMs can assist payers in the identification of gaps, and the development and implementation of cutting edge and customized clinical programs designed to improve STAR ratings and HEDIS measures. Such programs are relevant and valuable to payers, as they support clinical initiatives, assisting payers in meeting objectives that translate into financial benefits for the organization.

In light of specialty drug trends, such as a burgeoning pharmaceutical pipeline — dominated by specialty drugs that are estimated to comprise 50 percent of overall drug spend by 2018, payers are changing their view of essential PBM support services. Forward-thinking payers are seeking the support of a value-based PBM with expertise in management of complex and costly therapies, including specialty drugs administered within the medical benefit. With a decade of experience in this arena, Magellan Rx is one example of a full-service PBM, with the distinction of having significant expertise in managing specialty drugs, including those covered under the medical benefit. The additional benefit of clinical expertise and robust analytical support are critical in the development of cutting edge clinical programs that simultaneously support the objectives of payers and consider the interests of other stakeholders in the managed care marketplace. These are critical strengths that value-based PBMs of the future must possesses in order to effectively support payers in meeting the demands of tomorrow’s health care marketplace; providing tailor-made, disease-specific services that provide value and drive healthier outcomes for members.