Heeding winds of change from both inside and outside of their industry, pharmacy benefit managers (PBMs) in 2006 took several significant steps toward establishing more transparent business practices — moves that will likely echo in 2007 and beyond. Some observers contend that recent PBM developments could save pharmaceutical payers up to 6% on drug costs. But others argue that PBMs will find new ways to make up for any lost profits, including by hiking administrative fees. PBM Transparency: What Recent News Events Mean for Payers, PBMs and Other Stakeholders examines key developments and issues surrounding the PBM industry’s march toward greater transparency. It includes an edited transcript of a well-received Nov. 30, 2006, AIS audioconference, as well as presenters’ slide presentations and AIS articles on the topic.

In this report, three experts with different perspectives on the PBM industry address questions such as:

• What is and isn't PBM transparency, and what challenges do PBMs face in implementing a transparent business model?
• What is and will be the financial impact of transparency on payers and PBMs?
• How important is transparency for clinical issues and member support?
• The changing financial dynamic — what's driving PBM industry changes?
• How has the PBM industry stepped up to address the issue?
• How will a transparent pricing model lay the groundwork for other cost savings?

Learn how you can make sense of and best prepare for trends in PBM transparency. Order your copy of PBM Transparency: What Recent News Events Mean for Payers, PBMs and Other Stakeholders today!

Table of Contents

Introduction

Transcript of AIS Audioconference Nov. 30, 2006

• Remarks by Tim Watson
• Remarks by Joseph Gifford
• Remarks by David Clark
• Questions and Answers

Materials Supplied by Tim Watson

Materials Supplied by Joseph Gifford and David Clark

Selected Articles From AIS Publications

• URAC: First-Ever PBM Accreditation Plan Will Become ‘Must-Have’ Stamp of Approval
• URAC Releases PBM Accreditation Standards
• First DataBank Deal May Signal End of AWP Pricing; WAC Seen as Possible Successor
• Wal-Mart’s Generic Drug Discount Program Could Pressure PBMs to Lower Rx Margins
• PBM Transparency Deal May Lower Rx Drug Spending, but Won’t Shake Up the Industry

Written By

This book was compiled by the editorial staff of AIS. The speakers at the November 30, 2006, audioconference were:

DAVID CLARK, vice president of medical and pharmacy services at The Regence Group, which serves roughly 3 million members of Blue Cross/Blue Shield plans in Oregon, Washington state, Utah and Idaho. The Regence Group also provides PBM support nationally through its RegenceRx subsidiary. Mr. Clark's responsibilities include overseeing all pharmacy-related services, including clinical evidence review of products, formulary activities, pharmacy and therapeutics committee, clinical services, contracting and benefit design. His responsibilities were recently expanded to include oversight of all medical operations, including disease management, care management, credentialing and appeals.

JOSEPH GIFFORD, M.D., chief medical officer at Regence Blue Shield. Dr. Gifford is responsible for cost and quality of health care services, including PBM services provided by RegenceRx, to 1.1 million members in Washington state. He has extensive experience in the information technology sector, as well as on both the provider and payer side of health care services. Prior to joining Regence BlueShield, Dr. Gifford co-founded a health care media software company and served in an Internet company spun off from Sun Microsystems. He was residency-trained in internal medicine at the University of Washington after receiving his M.D. degree from the University of California at San Diego.

TIM WATSON, Pharm.D., principal of Pharmaceutical Strategies Group. Dr. Watson has extensive experience in the pharmacy benefits arena, including management experience with several leading PBMs, consulting experience with Deloitte & Touche, and now as a principal and co-owner of a large pharmacy benefits consulting firm. He is a frequent contributor to leading trade journals, and is author of AIS's best selling book, "PBM Formulary Strategies and Their Impact on Payers," published in 2003. He has provided pharmacy consulting services to some of the largest employers and plan sponsors in the country. Dr. Watson received his Pharm.D. from the University of Arizona.

Written For

• Pharmacy directors, medical officers, clinical services directors, financial executives, marketers, consultants and contracting executives at:
  • Managed care organizations
  • PBMs
  • Pharmaceutical firms
  • Large employers
  • Retail pharmacy chains

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