4 PBM Trends to Watch — And, Yes, Transparency is One of Them | Brandon Newman 2022 PBMI Annual National Conference

Specialty drugs as a growing share of the pharmacy spend and the push for transparency are all-too familiar themes in the pharmacy benefit management (PBM) industry, but they have staying power as the top trends to watch, said the opening speaker of the 2022 Annual National Conference of the Pharmacy Benefit Management Institute in Orlando.

Brandon Newman

Brandon Newman, CEO and founder of Xevant, which he described as a “PBM performance optimization platform,” recalled when Gleevec (imatinib) came on the market after it was approved by the FDA in 2001 as a treatment for chronic myelogenous leukemia. The industry was used to managing drugs that cost several hundred dollars a year. “At a price tag of $40,000, our heads were on swivel,” Newman said.

Newman said specialty drugs have gone from 28% of the pharmacy spend to 56% in the past 10 years. But when they are used appropriately and managed correctly, he said, specialty drugs can drive down the overall economic burden of chronic disease by reducing hospitalizations and other healthcare costs.

The other three trends that Newman discussed during his talk today were collaboration, real-time optimization and transparency.

Transparency and the related issue of rebates have been talked about for years within the industry. But now they are on the minds of outsiders as the profile of the PBM industry has grown and with that, its reputation as pharma’s profitable middleman.

“Rebates are one of the things that Aunt Martha loves to talk about because she hears about it on the news or hears about them from politicians.”

Newman showed a slide that said the share of rebates that PBMs passed through to insurers and payers increased from 78% in 2012 to 91% in 2016 and that proportion is growing. But he added this caveat:

“There is some debate about if that (91%) is an accurate number. Just because I say that, (that) says we’ve got a problem — 91% of what?”

He said the industry has work to do on transparency and rebates.

Newman painted a picture of an industry that has become more specialized, with many companies like his focusing on one particular area or function in the PBM industry. Although some payers prefer the simplicity of one-stop buying of all their pharmacy and healthcare management from a single large company, those arrangements may mean missing out on the gains from working with multiple, perhaps specialized, companies. A pharmacy benefits administrator can work like a general contractor, orchestrating the work of the smaller companies, he said.

“Humana — I am not trying to call out a name here — might have best solution in X. But they don’t have the best solution in Y or Z or A, B and C,” Newman said.

Companies that might view themselves as competitors would benefit from collaboration in this model of specialization and honed excellence, he said.

“Us, as an industry, finding ways to integrate, collaborate, to be a team — I think is going make our future easier,” Newman told the PBMI attendees.

The fourth trend that Newman spoke about was real-time optimization. The industry’s traditional way of conducting complicated reviews of a year's worth of claims and drug spend and then offering advice to clients based on those copious reports needs to change, said Newman. He said the industry needs to take advantage of software and automation to review claims (and rebates) in, more or less, real time. Newman said his company specializes in this kind of work and has success in getting larger rebates for clients.