What The PBM Industry Should Focus On In 2025 | with Julie Wasserman

This video provides an in-depth exploration of the critical areas the Pharmacy Benefit Manager (PBM) industry should prioritize in 2025, particularly from the perspective of employers. Julie Wasserman, VP of Sales for VerusRx, discusses the complexities of the PBM landscape, emphasizing the need for transparency, aligned incentives, and proactive member engagement to drive down healthcare costs. The conversation begins by highlighting the dramatic increase in high-cost claims post-ACA and the resulting financial pressures on self-funded employers, setting the stage for a discussion on how PBMs can truly deliver value.

A significant portion of the discussion focuses on the pitfalls of traditional PBM practices, particularly "rebate chasing" and the implications of vertical integration where insurance carriers own PBMs. Wasserman argues that maximizing rebates often leads to higher upfront drug costs for employers, as incentives are misaligned. Instead, she advocates for a model that prioritizes sourcing the right drug at the lowest possible cost from the outset. This leads into a detailed explanation of international drug sourcing, specifically the VerusRx Canadian sourcing model, which emphasizes integrity, logistics management, and proactive member advocacy to overcome common skepticism and ensure seamless access to medication.

The conversation also delves into the critical role of patient assistance programs for specialty medications, where PBMs should actively assist members in navigating complex application processes to secure drugs at no cost. A timely and pressing issue, GLP-1 medications, is discussed with a focus on their financial implications and potential long-term health risks, drawing parallels to the Fen-Phen crisis. Wasserman stresses that the true cost of GLP-1s might extend far beyond immediate drug spend, urging a cautious approach. The video concludes by outlining VerusRx's in-house, end-to-end management model, which aims to build trust, provide immediate savings, and move beyond the limitations of "spreadsheet games" in PBM selection.

Key Takeaways:

• PBM Transparency is Paramount: True transparency in the PBM industry means understanding how a PBM gets paid, as this directly reveals their incentives and whether they align with an employer's goal of reducing healthcare spend. Contracts should clearly outline payment structures.
• Avoid Rebate Chasing: Focusing on maximizing rebates often results in higher initial drug costs for employers, as PBMs may be incentivized to favor drugs with higher rebates rather than the most cost-effective options. Prioritize upfront cost reduction over delayed rebate returns.
• Scrutinize Vertical Integration: When PBMs are owned by insurance carriers, there's a potential for misaligned incentives, as the PBM becomes a significant revenue stream for the carrier. Employers should question why carving out a PBM is resisted and demand clarity on revenue generation.
• Embrace International Sourcing with Integrity: Sourcing high-cost brand drugs from outside the U.S., particularly through models like VerusRx's brick-and-mortar Canadian pharmacy, can yield significant savings (e.g., 30-40% less for Humira). Key considerations include ensuring drug integrity, managing customs, and providing cold chain capabilities.
• Proactive Member Advocacy is Crucial: PBMs should proactively identify eligible members for cost-saving programs (like Canadian sourcing or patient assistance) before day one of a plan. This involves direct outreach, education, and handling all logistical heavy lifting to build trust and increase adoption rates.
• Leverage Patient Assistance Programs: For specialty medications, PBMs should offer comprehensive support for patient assistance programs, guiding members through the application process to secure drugs at no cost, which offers far greater savings than any rebate.
• Cautious Approach to GLP-1s: While GLP-1s offer significant weight loss, their long-term health effects are unknown. Employers should consider the potential for future, high-cost health complications (e.g., organ damage) beyond the immediate drug spend, drawing parallels to the Fen-Phen crisis.
• Incentivize Member Choices: To encourage participation in cost-saving programs, plan designs must incorporate sufficient financial incentives (e.g., waiving co-pays for Canadian-sourced drugs, higher co-pays for domestic retail fills) to make the optimal choice obvious and beneficial for the member.
• Beyond the "Spreadsheet Game": Evaluating PBMs solely on discounts and rebates presented in spreadsheets can be misleading. Employers should look for holistic value, including in-house management, proactive advocacy, and proven member engagement strategies that drive real, sustained savings.
• In-House Management for Seamless Experience: PBMs that manage the entire process in-house, from e-prescription to fulfillment and member advocacy, can offer quicker turnaround times, eliminate language barriers (healthcare literacy), and build greater trust with members.
• Address Healthcare Literacy: With low healthcare literacy rates, PBMs have a responsibility to simplify complex processes and explain benefits clearly, making it easier for members to make informed decisions about their care and medication.
• Future Shift Towards Real Costs: The industry is moving towards a greater demand for transparency regarding the "real" or "fair" cost of services and drugs, challenging inflated pricing and traditional discount models. This shift, combined with efforts to improve overall health, could lead to significant cost reductions.

Key Concepts:

• PBM (Pharmacy Benefit Manager): A third-party administrator of prescription drug programs for commercial health plans, self-insured employer plans, government plans, and others.
• Rebate Chasing: A PBM strategy focused on negotiating and collecting rebates from pharmaceutical manufacturers, often leading to higher list prices for drugs.
• Vertical Integration: The ownership of a PBM by an insurance carrier, raising questions about aligned incentives and revenue streams.
• International Sourcing (Canadian Sourcing): The practice of obtaining prescription drugs from pharmacies outside the United States, often at significantly lower costs, while maintaining drug integrity and safety standards.
• Patient Assistance Programs (PAPs): Programs offered by pharmaceutical manufacturers to provide free or low-cost prescription drugs to qualifying individuals who are unable to afford their medications.
• GLP-1s (Glucagon-like peptide-1 receptor agonists): A class of medications used to treat type 2 diabetes and, increasingly, for weight loss (e.g., Ozempic, Wegovy).
• Reference Based Pricing (RBP): A healthcare payment model where the plan sets a maximum payment amount for a specific service, and the member is responsible for any charges above that reference price. (Mentioned as an analogy for proactive negotiation).

Examples/Case Studies:

• Humira: Used as a prime example of a high-cost brand drug that can be sourced internationally (e.g., from Canada) at a significantly lower cost, highlighting the disparity in drug pricing between countries.
• Fen-Phen: Referenced as a historical example of a weight-loss drug that was widely adopted but later found to have severe, long-term health complications, serving as a cautionary tale for the potential risks of GLP-1s.
• VerusRx's Canadian Sourcing Model: Described as a brick-and-mortar pharmacy in Vancouver with robust logistics, customs management, cold chain capabilities, and proactive member engagement to ensure drug integrity and successful delivery.