Formulary guidance and transparency from P&T to point of care

Perspectives on Health Insurance Exchange Developments

Posted by Matt Breese on Feb 9, 2016

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The introduction of health exchanges, as a result of the Affordable Care Act, bred a new ecosystem for U.S. health plans. Initial guidelines required payers and PBMs to shift their business models to remain competitive within their businesses. With new mandates on the horizon, health plan stakeholders scramble to invest in resources to prepare for tighter deadlines and many pharmaceutical manufacturers still lack a consistent measure of how their products will be covered under these new plans.  Though regulators attempt to standardize the exchanges, the process is long and arduous, with so many changes creating more complexity elsewhere in the marketplace. 

Too Much Fuel in the Fire

In some markets, the large concentration of private payers within health insurance exchanges drives an unsustainable level of competition for plans. A set of public, government-run plan called the Consumer Operated and Oriented Plan, or CO-OP, which was created in response to the concern of private payers, faced hard times when “12 out of the 23 insurance co-ops established under the Affordable Care Act were shut down as of January 1, 2016.”  Health Republic Insurance of New York offered “the lowest premium cost among seven of the eight regions across the state,” but they were so low that the company couldn’t manage to stay afloat.  The same factors that facilitate affordable prices for consumers also generate pressures for payers, with a surge of new competition in the marketplace.

The Need for Transparency

There is also a growing need for transparency when it comes to reimbursement across health exchange plans.  As the cogs of industry turn, those involved in the processes, payers, providers, and pharmacists, need to be aware of not just what is happening, but how and why.  Some argue that the current lack of transparency allows pharmacy benefit manager corporations “to collect lucrative rebates from pharmaceutical manufacturers and mark up the cost of medication, charging the health plan more than the pharmacy is reimbursed.”  At the point of care, pharmacists lack insight into prescription drug reimbursement, specifically when it comes to generic medications. Organizations like NCPA advocate for increased transparency to help identify potential savings and conserve patient access as more Americans obtain coverage through health exchange plans. More transparency may also provide plan sponsors with “a greater ability to negotiate more competitive contracts” reducing overall drug spend. Relationships between pharmaceutical manufacturers and PBMs are more critical than ever before, with the industry relying on these contracts to help curb rising drug prices.

Manufacturer Implications

Recent news reveals that health exchange marketplace variables continue to pile up for manufacturers. The inception of HIX plans created both numerous challenges and opportunities for pharma and biotech. As payers sprinted to achieve Qualified Health Plan status, coverage decisions needed to be made quickly, upsetting the traditional and somewhat predictable payer-manufacturer contracting workflow. Years later, with more established marketplaces, manufacturers invest in targeted strategies to take advantage of market access opportunities in their product landscape. A market access analysis of the trending PCSK9 therapeutic area reveals the restricted reimbursement of health exchange plans as compared to commercial and managed Medicaid areas.


MMIT data current as of Q4 2015

This theme exists for many other therapeutic baskets, demanding greater attention from pharma teams as the number of lives covered under HIX plans increases.

As payers adjust to accommodate changing guidelines, pharmacists call for increased reimbursement visibility or manufacturers invest in strategies to better contract with plans, the future implications of health exchanges is still unclear. Organizations must do their best to observe the direction of the marketplace and develop tactics to shift their business focus.

Stay tuned for more developments on health exchanges and how these shifts affect your business.

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Topics: Industry Trends, Market Access, Payer