Featured in Health Business Daily, Feb. 14, 2018

PBMs Deploy Indication-Based Pricing for RA

A longer version of this article was published in the Feb. 9, 2018, issue of RADAR ON DRUG BENEFITS. Subscribe today for biweekly business strategies and analysis for health plans, employers, PBMs and pharma companies.

February 14, 2018

CVS Health Corp. is experimenting with indication-based pricing as part of its new Transform Rheumatoid Arthritis Care program, which could help enrollees see savings as high as 5% on their annual spend for RA drugs.

PBMs say indication-based pricing, in which medications are priced differently depending on their effectiveness in different indications, works for the anti-inflammatory class due to its high cost and growing availability of biosimilars. Autoimmune drugs are some of the most expensive therapeutic treatments, reaching several thousands of dollars per month.

CVS Health said the focus on RA among the autoimmune disease class is a priority “given that the cost and utilization of drugs to treat RA are a top drug and spend driver, accounting for nearly half of overall specialty drug trend.” The pharma giant said its multi-pronged approach in Transform RA Care also includes a trend guarantee based on the program’s ability to improve both clinical care and cost management.

CVS Health’s new Health program is “very similar” to that of Express Scripts Holding Co.’s SafeguardRx program, according to Josh Golden at Solid Benefit Guidance, a division of Arthur J. Gallagher & Co. In general, “these programs tend to steer members toward the PBM’s owned dispensing channels for the greatest effectiveness — which is obviously a win for the PBM. Also, many of these condition-based programs rely on backend pharmaceutical company revenue to subsidize the cost of administration. This isn’t inherently a problem, as long as the PBMs are willing to offer financial transparency and full disclosure of these revenue streams,” he says.

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