This week, Express Scripts announced an innovative pharmacy benefit contracting model for members of the National Drug Purchasing Coalition (NDPC), a group of 18 large employers. Click here to read the fully-titled press release.
You should pay close attention to this b.i.g. news. It is structured so that Express Scripts will not profit from the flow of funds from a brand-name manufacturer to a plan sponsor. What’s more, the PBM’s compensation will be fully delinked from drug list prices. Instead, Express Scripts will earn only fixed management fees plus additional at-risk compensation tied to clinical outcomes.
I spoke to Express Scripts and the NDPC’s consultant to clarify how the new model will differ from more conventional structures. As I see it, this PBM compensation approach could be an important step in our industry’s journey toward a world without rebates.
For now, it only applies to a sliver of Express Scripts’ revenues. But if the new pricing model is widely adopted, Express Scripts (Cigna) will be able to escape drug channel disruption unscathed.
The biggest unknown is how employers will behave as they select pharmacy benefits. Will the funds flowing transparently through the PBM be put toward solving the reverse insurance issue the gross-to-net bubble? Will this lower out-of-pocket costs for patients? As they say: Mo money, mo problems.
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