Rising costs of prescriptions have brought the pharmaceutical industry under increasing scrutiny over the last decade. With a pandemic now added to the mix, there is an added layer of pressure for change.
According to the American Society of Health-System Pharmacists, the U.S. spent $535.3 billion on prescription drugs alone in 2020, a shocking increase from 2019’s $369.7 billion expenditure, due to increasing drug use. SingleCare reported that within the first seven months of 2021, 1,283 different medications underwent a surge in price, a 16% increase compared to last year.
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Rightway works with clinical experts to guide users toward the best care options. Their new tool will secure the lowest net cost when procuring a drug on behalf of an employer. Then, Rightway will process claims and build formularies — a list of prescriptions approved for reimbursement by the PBM’s client.
“We've gotten rid of all of the rebates, all of the spread pricing,” says Jordan Feldman, CEO and co-founder of Rightway. “Employers are looking for transparency, which historically would have never been entertained by PBMs.”
By definition, PBMs are companies that manage
As Feldman points out, this issue stems back to rebates and spread pricing. PBMs have a history of choosing higher-priced drugs, he says, so they receive a higher rebate from manufacturers in exchange for being put on PBM’s formulary. On the other hand, spread pricing happens when PBMs charge health insurers and employers more money than what the drug costs.
PBMs often don’t fully disclose their rebate amounts or the
“As long as PBMs take rebates and don't disclose what their contracts are with drug manufacturers and retail pharmacies, then we're never going to solve this rising prescription drug problem in this country,” says Feldman. “We need to get rid of the mechanism that allows for that.”
This year, there have been over 100 bills introduced by states determined to hold PBMs accountable. West Virginia recently passed legislation requiring PBMs to offer 100% of their rebates to health plans. Additionally, Ohio and Mississippi sued the PBM Cetene Corporation for overcharging the states’ Medicaid programs. While Centene denied the allegations, the PBM paid Ohio $88.3 million and Mississippi $55.5 million in settlements in June.
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“We are tired of the status quo,” says Feldman. “What I believe is ultimately going to be created is direct contracting between the drug manufacturer and the employer.”
That would put the employer in the position to provide prescription drugs at the most cost-effective price on behalf of their benefits spending and employees. The employer could then compensate a company like Rightway for its services directly, ensuring that the cost of the drug itself does not affect Rightway’s pockets. This can potentially make an impact on what employees spend on their healthcare. Tech-focused businesses like Rightway are working to make this updated process a reality.
In one case study, RightwayRx, along with its healthcare navigation app, was able to help a property management group based in the south reduce pharmacy spending by 33% while saving the company $259,000 in total over the course of six months.
As PBMs face further investigations and distrust from those they serve, the healthcare ecosystem may undergo revision. This could mean employers will take on a much more active role in obtaining the best care for their employees.
“Employers are absolutely aligned to deliver the highest quality healthcare to their employees,” says Feldman. “The employer is taking control of their overall healthcare strategy.”
