PCMA: New England Journal of Medicine Article on Medicare & Comparative Effectiveness Underscores Potential of PBMs in New Drug Benefit
(Washington, DC)—As policymakers continue to debate how best to incorporate fully evidence-based medicine and comparative effectiveness into the Medicare program, a piece published today in the New England Journal of Medicine (NEJM) underscores that pharmacy benefit managers (PBMs) are ahead of the curve and have the potential to utilize these tools in administering the new Medicare prescription drug benefit, the Pharmaceutical Care Management Association (PCMA) said today. PCMA is the national association representing America’s pharmacy benefit managers.
“PBMs have been at the forefront of efforts to incorporate comparative effectiveness and other evidence-based medicine tools into the prescription-drug benefit arena,” said PCMA President Mark Merritt. “In Medicare, policymakers have only begun to scratch the surface in realizing the potential of these tools. A key challenge lies in avoiding a ‘one-size-fits-all’ approach, while at the same time promoting value-based purchasing. To that end, PCMA believes strongly that increased choice, competition, and information in Medicare will ensure that beneficiaries have access to cost-effective, clinically-sound prescription drugs.”
The piece, “Medicare and Cost-Effectiveness Analysis,” is running in the new issue of the NEJM and is authored by analysts at the Harvard School of Public Health, University of Michigan Health System, and the Ann Arbor Veterans Affairs Medical Center. Among the highlights:
Cost-effectiveness information in the Medicare prescription drug benefit will assume a more important role at the plan level, rather than at the national level. The authors note that “in all likelihood, plans’ use of cost-effectiveness information to guide (formulary) decisions will increase, expanding on the growing movement among many plans and pharmacy-benefit managers to adopt evidence-based and value-based formulary guidelines.” The Medicare Modernization Act requires the Agency for Health Care Research and Quality (AHRQ) to initiate a pilot comparative effectiveness research project in number of areas of health care, including prescription drugs.
A government-only approach to comparative effectiveness is not politically feasible. The authors note the many historical challenges associated with the federal government taking the lead on comparative effectiveness research. As an alternative, the authors recommend “a new Institute of Medicine-like entity” that would develop and distribute non-binding information and advice as public goods. Private and public purchasers Ă¢?? including the Medicare program Ă¢?? would be free to accept or reject its recommendations. As the authors themselves note: “the non-binding nature of these recommendations is important: decision makers themselves would decide how much weight to give cost-effectiveness evidence and how much to give to other factors.” The authors also note that one of the many challenges in implementing this approach lies in funding.
Comparative effectiveness is not a silver bullet. The authors conclude that “cost-effectiveness analysis will not solve all of Medicare’s problems. Policymakers would do well to keep expectations modest. Cost-effectiveness analysis must be part of a comprehensive strategy that involves changing incentives at multiple levels.”
PBMs rely upon panels of independent, clinical experts, called Pharmacy & Therapeutics (P&T) committees, to determine which drugs are most effective for specific needs before any cost considerations are taken into account. P&T committees are largely independent providers and include a variety of specialist physicians, pharmacists, and others with specific clinical knowledge of drugs and pharmacotherapy. These committees serve in an evaluative, educational, and advisory capacity in matters concerning formulary development and management. Primarily, this capacity is served in evaluating drugs for safety and efficacy. Development and maintenance of formularies is an ongoing activity, as they must be continually updated to keep pace with new therapies, recent evidence from clinical research, changes in medical practice, and FDA guidance. When drugs are determined to be therapeutically equivalent, PBM get the drug manufacturers of those respective drugs to compete and offer discounts in exchange for better placement on formularies.