With half of the American population receiving health insurance from their jobs, there’s no doubt that employers are at the forefront of rising healthcare costs. But many employers may feel helpless in the face of industries seemingly out of their control — and the trillion-dollar pharmaceutical industry is no exception.
According to the Health Institute, over 131 million Americans use
“Healthcare in this country, and PBMs specifically, have been focused on volume because it’s a very retail-centric model,” says Ganesh. “EmpiRx wants to drive a different paradigm, where it's not about volume but about driving the right clinical outcomes and financial outcomes.”
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Employers often feel they have to choose between low costs and quality access when it comes to healthcare benefits. However, employers may not have to choose, if given a healthcare model that minimizes spend waste while also putting the health of the employer’s population first, Ganesh explains. For EmpiRx, this looks like a value-based model.
Traditionally, PBMs charge their clients an administrative or service fee. However, PBMs do not often disclose how they’re receiving other types of revenue, and can potentially charge health insurers and employers more money than what the drug costs, or pick higher-priced drugs in exchange for a higher rebate from drug manufacturers. But in EmpiRx’s value-based model, EmpiRx loses money if its client does not save an agreed amount on their drug spend.
“When the employer loses, the PBM should lose. When the employer wins, the PBM should win,” says Ganesh. “We don't have to choose between cost and access — that’s a false dichotomy.”
For Ganesh, this not only means financial alignment, but clinical alignment with the employer’s population. For example, EmpiRx works with a grocery store workers’ union, which is a population often afflicted by rheumatoid arthritis. Instead of giving workers access to the priciest drug on the market, EmpiRx worked with individuals to determine if other medications would be a better fit, explains Ganesh.
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“It’s extremely important to understand the health of populations and the whole person, versus just looking at the most dominant condition,” he says. “We make decisions based on the patient’s weight, age, gender, existing comorbidities and other medications they’re on. This helps take prescription waste out of the equation.”
EmpiRx pharmacists partner with a patient’s physician to determine if the patient can switch to a less expensive medication that is just as or even more effective than the original prescription. By finding the right fit the first time, Ganesh underlines that EmpiRx’s model is the antithesis of the “more is more” mentality in healthcare. And more prescription drugs are not making Americans healthier: the CDC reports that 40% of Americans have two or more chronic illnesses — a number that is expected to increase within the decade.
“We've continued to get sicker as a population and consume more drugs as a population, knowing that more drugs do not equate to better healthcare,” he says. “But PBMs have not changed the way they have operated.”
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While he and his team are working to do things differently, he acknowledges the long road ahead to changing that status quo. Ganesh recalls how the chief financial officer at a large healthcare company reported an expected uptake in drug utilization during COVID lockdown, and how those on the call, including share investors, cheered.
“What was essentially said is that they’re going to pump more drugs into the system the second half of the year,” says Ganesh. “The investors thought it was a great idea because it impacts the revenue stream.”
Ganesh hopes an increasing prevalence of value-based models can start to change the trajectory of healthcare so that value is prioritized over volume. But he believes employers' demands for savings and clinical results will be what defines the industry.
“We are living in Einstein's definition of insanity, because we do the same thing over and over again, expecting a different outcome,” says Ganesh. “We can't wait for something to change in the market. The time is now, and employers need to be the change they want to see in healthcare benefits.”
