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Myndshft Blog

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September 27, 2023

Tackling the PBM Dilemma: Is Automated Pharma Prior Auth the Answer to Healthcare Complexity?

by Susan Lawson-Dawson | News

Last year, the Federal Trade Commission (FTC) announced an investigation into the business practices of Pharmacy Benefit Managers (PBMs), beginning with the six largest ones in the U.S. This year, the U.S. The House Oversight and Accountability Committee launched its own inquiry into PBMs. Why are they under so much scrutiny? While PBMs get described as integral to the U.S. healthcare landscape, a growing number of healthcare stakeholders are raising critical questions about added complexity, higher costs, and patient impact. Let’s explore the factors  leading many to reevaluate the role PBMs play in our healthcare system and how pharma prior auth automation can help.  In case you hadn’t heard, Myndshft now offers the first-of-its-kind in the industry: a unified prior authorization platform that handles both medical and pharmacy prior authorizations. 

Unpacking the traditional roles: The good, the bad, and the complex

At the core, PBMs started as intermediaries responsible for processing prescriptions and negotiating drug prices between pharmacies and health insurance companies. Over the years, their role expanded to formulary management, administering drug benefits, and more. However, this expansion has resulted in a more intricate network of relationships and negotiations, adding complexity to an already complicated and opaque system.

The power to negotiate, or the power to inflate?

Cost inflation is a growing concern. PBMs emerged as a way to bring down drug prices through collective bargaining power, however recent investigations reveal less-than-transparent practices, such as clawbacks and spread pricing, that actually contribute to higher costs for payers and lead to increased out-of-pocket expenses for patients.

Gaming the system with rebates

Another sore point focuses on the rebate system negotiated with pharmaceutical companies. While rebates might seem like discounts, they often don’t translate into lower costs for patients or healthcare providers. In many cases, these so-called “savings” get eaten up in the web of negotiations and very little trickles down to the patients.

Delays and denials: The prior authorization quagmire

Perhaps the  most controversial role that PBMs play is in the prior authorization of medications. While intended as a cost-control mechanism, it frequently results in delays or outright denials of essential medications, leading to adverse patient outcomes. Among healthcare providers, these scenarios can translate into patient dissatisfaction and lower quality-of-care metrics. Not to mention, the time and costs associated with today’s burdensome prior authorization processes have a direct impact on providers’ bottom lines. 

Restricted access

PBMs control the formularies, deciding which medications they cover and at what level. This often limits patient access to necessary medications, forcing physicians to choose between prescribing a less effective, but covered, drug or battling with paperwork and bureaucracy to get approval for the best medication for the patient.

Erosion of trust

The opaque business practices of some PBMs can erode trust essential for a functional and efficient healthcare system. Additionally, the added layer of bureaucracy acts as a drain on already limited resources.

Given the level of scrutiny PBMs are under, change will come. But change in healthcare moves at a snail’s pace, so arming yourself with tools that enable you to remain agile are a must. Automated prior authorization software helps lessen the burden on providers by facilitating streamlined data exchange and reducing errors that lead to preventable delays and denials.  It provides the flexibility that providers will need as the role of PBMs in our healthcare system continues to evolve. 

The impacts that PBMs exert on costs and patient care are becoming harder to ignore. As stewards of healthcare systems, it’s essential to critically evaluate the role of PBMs in your ecosystem and consider whether they are partners in healthcare delivery or bottlenecks in disguise.

In a world where the only constant is change, staying informed and adaptable is crucial. Automated pharma prior authorizations can help you do just that. Connect with Myndshft to get started.