Prime and Walgreens Alliance May Impact Specialty Drug Costs

Drug costs have become a hot button issue throughout the healthcare and pharmaceutical industries, as patient outcomes and value-based care take center stage.

The US Centers for Medicare and Medicaid Services has focused on both aspects of healthcare through proposed rules and payment models, among other cost-controlling actions.

Executives at Prime Therapeutics, a pharmacy benefit manager owned by 14 Blue Cross Blue Shield plans, believe that cost control and improved patient care are both possible through their novel strategic alliance with retail pharmacy chain, Walgreens.

“Prime was one of the earliest to integrate the health plan and the PBM, but until this strategic alliance, nobody has successfully created an opportunity where the retail pharmacy network will be integrated with the PBM, who will also be integrated with the health plan; so that all are sharing information, strategies, and approaches to both the fulfillment of prescriptions and in assisting patients in properly utilizing the prescriptions and finding the lowest cost alternatives,” CEO and President of Prime Therapeutics Jim DuCharme told Specialty Pharmacy Times.

The strategic alliance will create a new organization that consolidates both companies’ central specialty and mail-order pharmacy businesses. This new company will be run by an independent management team, with an independent board, but will be owned by both Prime and Walgreens.

By aligning Prime’s 22 million customers with Walgreens’ retail pharmacy space, DuCharme predicts that drug costs will decrease.

“As the pharmaceutical industry has consolidated, the only effective way for PBMs, for retail pharmacies, for anybody on the other side of the table to effectively negotiate price and drug cost reductions with pharma is to be of equivalent leverage,” DuCharme said.

By aligning and creating a larger entity, pharmaceutical manufacturers are more likely to negotiate a lower price and increase cost discipline. Walgreens and Blue Cross Blue Shield plans are both trusted, well-known thought leaders in the healthcare landscape, and together will be able to create a more compelling conversation about cost discipline, according to Prime.

While some could argue that consolidation and preferred pharmacy networks can potentially open the door for increased drug prices and monopolies, Prime and many other pharmacy benefit managers believe that these alliances have the power to decrease drug costs.

“Just as you see on the insurance side, the issue is simply that we cannot offer completely open-ended unrestricted access to any health service, to any prescription, to any treatment without any guardrails. That’s what leads to unbridled price increases,” DuCharme said. “What these networks will do is make the pharmacy network a bit more selective, so maybe you’ll only have 3 of the pharmacies out of 4 on every corner of the intersection in a particular network. But there are a ton of pharmacies in the United States. So, the idea of making the networks selective or tighter for material cost savings and health insurance premium savings is exactly the type of solutions we need to deliver to our Blue Cross Blue Shields plans.”

With this alliance, DuCharme said that there will likely be more discussions about outcomes-based reimbursement and creative reimbursement models that reward cost discipline, which can all lower prices for customers.

Data sharing is also expected to play a role in cost discipline, especially in regards to specialty drugs for conditions such as cancer. Information about the use of a drug, adherence, and outcomes for specialty drugs are valuable to large pharmaceutical manufacturers, and can be used to leverage lower costs.

Patients will also see benefits from this alliance besides lower drug costs. Patients will also be able to access information about their prescriptions and clinical advice through new websites and mobile apps.  Prime predicts that streamlined technology will be able to offer patients more benefits than they currently have.

“Through Walgreens, each one of them has the opportunity to simply use better, and more efficient technology today, whether it’s onsite in the pharmacy, telephonic, or web-based, to maximize the valuable information that we can put into their hands, both on cost of drugs and proper use of drugs, and adherence to those drugs,” DuCharme said.

Patients will also be able to receive treatments at the local retail locations, as well as counseling advice about adherence and use of prescription drugs. Patients will also be able to have additional member services, customer service, and product offerings that can be tailored to them at the retail locations, DuCharme said.

While there are no current plans to create this type of alliance with other pharmacy chains, the potential is there to control costs. This alliance between a health plan-owned pharmacy benefit manager and a large retail pharmacy is the first of its kind, and is sure to continue the conversation on methods to control drug costs.

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