Is this PBM tactic blocking healthcare access?

Share on Facebook
Share on Twitter
Share on
LinkedIn
+

Utilization Management (UM) was originally a strategy designed to improve the safety, quality, and cost-effectiveness of physician prescribing. However, UM has grown exponentially over the last decade, becoming more a tactic for Pharmacy Benefit Managers (PBMs) to manage costs to benefit their bottom line. The growth of UM usage has occurred particularly for treatments that address chronic illnesses, which has created many difficulties as patients with serious conditions are now faced with administrative burdens that cause treatment delays ultimately impacting their health outcomes. UM should be reevaluated with a focus on putting patients first.

One of the most common UM strategies is a prior authorization (PA). This tactic requires that patients obtain insurer approval for medicines before they are dispensed, with the initial goals of preventing unnecessary utilization of biopharmaceuticals and decreasing healthcare spending. However, a study conducted by Robert Popovian and Wayne Winegarden investigating the impact of prior authorizations has demonstrated that such schemes increase overall healthcare spending by at least $1.9 billion, primarily imposing these administrative costs on employers, patients, and providers while benefitting PBMs (3).

The question of how UM techniques benefit PBMs is heightened by examining the role of drug rebates. PA is financially beneficial to PBMs on both sides of the equation, as they charge clients for administrative costs of each one and receive rebates from pharmaceutical manufacturers on the underlying prescription. The big question therefore is whether UM is used to ensure that the patient receives the optimal prescription (as its original alleged intent), or mainly for maximizing profit on the PBM side.

The number of PAs only continues to increase. From 2014 to 2020, a study found that the use of PAs increased on commercial plan formularies in nine of twelve major therapeutic areas (including cancer, autoimmune disorders, chronic conditions, and mental health), and restrictions due to UM have increased in all twelve highlighted therapeutic areas (2).

To make matters worse, the 2021 American Medical Association (AMA) PA Physician Survey reported that 73 percent of the imposed PAs are rarely based on medical-based evidence or clinical guidelines, implying that their use is not in the patient’s best interest (1). One of the most significant inefficiencies of prior authorizations are the considerable time delays once requests are submitted. Due to the frequent need for resubmissions, studies have tallied that physicians spend an average of 20 hours helping patients access these medications. Additionally, physicians suffer extra loss by requiring office staff to attend specifically to this (1).

The AMA survey highlighted that in 91 percent of cases, the use of PAs has led to negative clinical outcomes (1). More specifically, 93 percent of those cases have led to delays of which 82 percent of patients do not even follow through on the treatments. Because of these delays, many treatments are altered or stopped (1). Even when treatments are obtained, the final prescribed treatment is often different from the original request due to the inaccessibility of the original prescription, leading to suboptimal care for patients since they often forgo their providers’ prescribed treatment.

These numbers showcase a brutal reality of care inequities masked under the premise of “managing spending”. UM functions to give PBMs unfair ownership over the decision of who gets access to what care.  As a result, in the big picture, these inequitable workflows ultimately determine who will have access to good treatment due to factors outside the patient’s control, leading to poor health outcomes. For this reason, many physicians and patients are calling for a reassessment of UM practices.

Citations

  1. Ama Prior Authorization (PA) Physician Survey. American Medical Association, 2021,

https://www.ama-assn.org/system/files/prior-authorization-survey.pdf

2. Meyer Rebecca Yip Principal Yonatan Mengesha Associate , Tiernan, et al.“Utilization Management Trends in the Commercial Market, 2014–2020.” Avalere Health, 30 Nov. 2021, https://avalere.com/insights/utilization-management-trends-in-the-commercial-market-2014-2020.

3. Popovian R, Winegarden W (2021) An Estimate of the Net Benefits from Prior Authorization Policies in the U.S. Health Sci J. 15 No. 4: 833.

Related Posts:

Massachusetts Hospitals Pull Back on Charity Care as Revenue from Federal 340B Drug Discount Program Explodes

Over the past decade, the revenue for hospitals generated by the federal 340B drug discount program, initially intended to serve low-income, uninsured populations, has exploded even while a number of important Massachusetts hospitals have reduced the level of charity care they provide, according to a new study published by Pioneer Institute. The Pioneer Institute study, “340B Drug Discounts: An Increasingly Dysfunctional Program,” notes that nationwide, 340B drug sales rose from $9 billion in 2014 to $38 billion in 2020.

The Promise and Challenges of Rare Cancer Treatments

Dr. William Smith, Pioneer Institute's Visiting Fellow in Life Sciences, spoke about the challenges and opportunities for rare cancer treatments, in a video interview produced by Rare Cancers, a patient group based in Australia, for the November 26th CAN Forum. 

Study: Decline in Cardiovascular Health Screenings During COVID-19 Pandemic Poses New Public Health Threat

Pioneer Institute today released a new analysis focused on cardiovascular disease, An “Impending Tsunami” in Mortality from Traditional Diseases?, that examines how the COVID-19 pandemic has created another unrelated public health crisis. The Pioneer analysis examines how a single-minded public health focus on COVID-19, social distancing, and lockdowns drove reductions in screenings, diagnoses, and early treatment for complex conditions such as heart disease.

A Modest Proposal to Raise Federal Revenue

As a way to tackle drug prices, President Joe Biden recently announced that he supports the so-called “inflation rebate,” which would require drug companies to give the federal government any revenue from Medicare drug prices above the general rate of inflation. Senate Finance Committee Chairman Ron Wyden and House Speaker Nancy Pelosi have also publicly endorsed the inflation rebate.

New Analysis: ICER Framework Ignores Patient Preferences, Innovation & Societal Benefits in Evaluating Cost-Effectiveness of New Cancer Treatments

Pioneer Institute today released a new analysis, The QALY and Cancer Treatments: An Ill-Advised Match, that examines the alarming methodological and contextual shortcomings of the Quality Adjusted Life Years (QALY)-based methodology in evaluating new cancer therapies. The Pioneer Institute analysis reveals five specific problems with ICER’s evaluation of cancer treatments and demonstrates the urgent need to prohibit the use of the QALY amid trends in rapid cancer innovations and personalized medicine.

ICER Proves Its Lack of Business Acumen, Again

/
A recent Institute for Clinical and Economic Review (ICER) “Report on Unsupported Price Increases,” concluded that: “Among the top drugs with price increases in 2019…ICER determined that seven of 10 lacked adequate new evidence to demonstrate a substantial clinical benefit that was not yet previously known.”  The impression left by the report is that drug companies arbitrarily raise prices without good reason.  As with so many ICER products, the study is misleading and demonstrates a profound lack of business acumen.

Study: Growth of Antibiotic-Resistant Infections Could Have Massive Human, Financial Costs

The world was blindsided by COVID-19, but a new Pioneer Institute study finds that even as we continue to wrestle with the pandemic, another threat looms that scientists have long known about but the nation has thus far failed to address: the growth of antibiotic-resistant infections. “Market dysfunction and perverse Medicare reimbursement rates have led to a growth in infections that resist antibiotics,” said Gunnar Esiason, author of “Antimicrobial Resistance: Learning from the current global health crisis to prevent another one.”  If we don’t solve this problem, the human and economic costs are likely to be astronomical.”

Study: Growing Drug Rebates Hurt Both Consumers and Healthcare System

Ever-larger rebates are distorting the market for branded drugs and producing outcomes that often benefit neither consumers nor the healthcare system, according to a new study published by Pioneer Institute.

Study Finds Pandemic Likely to Negatively Impact Biopharmaceutical Sector

Contrary to conventional wisdom that says the coronavirus pandemic will generally benefit biopharmaceutical companies, a new Pioneer Institute study finds many companies will emerge from the pandemic commercially weaker, dealing with delays in new product launches and with fewer resources to invest in research and development.

New Report: Quality Adjusted Life Years (QALY) Methodology Discriminates Against Older Americans, Threatens to Deny Seniors Access to Life-Saving Care

New report asserts that with older americans more vulnerable during the COVID-19 pandemic, all health plans should avoid using the QALY methodology when assessing the value of care for older patients