The drug channel challenges that make drug discount programs so tough to manage
Dated infrastructure undermines 21st century drug channels
The drug channel is big, complex and slow to change. Most of the system’s existing challenges could be solved with efficient technology. Instead, legacy systems pose ongoing obstacles, which are time-consuming and costly to resolve.
One major source of friction: the fragmented systems burdened with managing data about drug discounts, provided when the pharmacy or provider purchases the drug, and drug rebates, which are determined after the drug is dispensed to a patient. Medicaid, private insurers, healthcare providers and drug manufacturers all have their own formats, systems and invoices. Where drug discount and rebate programs overlap, key identifiers for specific drugs, pharmacies, providers and dispenses are often inconsistent or missing.
When disputes arise, they’re typically addressed on a case-by-case basis over phone or email, which is a lengthy, often unproductive process. Resolution is difficult.
Platform technologies can make instant payments and fast communication between manufacturers, pharmacies and providers effortless, yet industry stakeholders are still relying on legacy systems that turn accurate invoicing into a multiyear project.
An inefficient drug channel allows fraud, waste and abuse
Noncompliance in drug discount and rebate programs is tough to solve partly because it’s tough to identify. The flow of funds and data in the drug channel is often inefficient and convoluted, obscuring the source of waste.
When an insured patient fills a prescription, they typically pay a co-pay or co-insurance (along with a health insurance premium for coverage that includes prescription drug benefits). The co-pay goes to the pharmacy, and the PBM also pays the pharmacy. The insurer pays the PBM. The pharmacy pays a drug wholesaler. The wholesaler pays the manufacturer. The manufacturer may pay the PBM a rebate, and the PBM may also pay some of that rebate back to the payer or employer.
All for just one prescription.
Factor in the complex matrix of drug discount and rebate programs, including 340B, Medicaid, Medicare Part D rebates, co-pay coupon cards, patient assistance programs and more, and things get even more complicated.
The patient only knows what they pay at the pharmacy counter, and has little way of untangling the complex web of contracts and pricing structures underlying it. Even players in the drug channel have little insight into the network as a whole. So, when fraud, waste and abuse occur, it’s difficult to identify. And the patient, who is most harmed by this dysfunction due to its impact on their prescription drug costs, has the least visibility into what’s causing it.
To uncover the waste in the system, first it has to be visible.