Influencing Pharmaceutical Rebates with Data Analysis

In a recent report, Dr. Charles Roehrig discusses the impact of pharmaceutical rebates on the healthcare system. He concludes that rebates benefit both payers and consumers stating, “Rebate payments have lowered government costs and contributed to lower premiums for plan enrollees. Because health plans provide more favorable formulary placement in exchange for the rebates, consumers have seen reduced copays at the point of purchase.”

This challenges the widespread notion that pharmaceutical rebates primarily benefit PBMs. To provide more clarity on the topic, key decision-makers such as Benefits Managers and PBMs have been utilizing intelligent and actionable data analysis. Here, we dive more into how those insights influence pharmaceutical rebates holistically and how to leverage them for better client performance.

Effects Data Analysis Has on Formulary Development

Formulary development is highly debated in the healthcare industry. Though it’s at the top of the prescription drug pricing funnel, the decisions trickle down and can ultimately affect patient outcomes.

For example; if a formulary excludes certain drugs it will result in favoring other drugs within a class. To compete, pharma companies pay top dollar to have preferential treatment on a formulary causing higher rebates. Unfortunately, this results in less access to medications and in some cases (hotly debated) worse outcomes.

There is a lot of discourse over which drugs should be excluded and some accuse PBMs of selecting the drugs they get the most rebate for instead of what is in the best interest of the member/patient.

Data analysis, at this stage, provides transparency on cost (plan cost and member cost) and imparts insight into member impact, member outcomes, rebate, and discount impact. This approach gives PBMs and Benefits Managers a comprehensive understanding of how a pharmaceutical rebate will impact both health plans and members/patients.

Impacting Rebate Negotiations

Though there are annual changes that happen, formularies are typically reviewed and amended quarterly. Good pharmaceutical and therapeutics committees follow a proven approach for effective formulary management: select a wide range of experts (doctors, pharmacists, etc), study and evaluate all available resources, and then focus on outcomes before ever considering the cost impact. Once those decisions are made, formulary managers will then see what can be achieved through pharma for rebates.

It is here that data analytics from companies, like Xevant, can be beneficial. Through real-time insights, Xevant can see how drug utilization, patient demographics, and a myriad of other influencing factors will affect these decisions, and if new contracts with pharma will be required. Additionally, Xevant can identify if they should start working with plan sponsors/employers about changing cost-share or benefit structures to help promote favored drugs.

Insight Provides Power

Through data analytics, PBM’s can gain insight on drug utilization, selective power of the consumer, market-share, and channel performance (pharmacies). With this knowledge, PBM’s attain more power when negotiating pharmaceutical rebates as it reflects where the market currently stands.

Analysis can also benefit consultants, plan sponsors, health plans, and TPAs by providing them with information on what motivates a PBM, answering questions like:

  • Why formularies are changing
  • If the formulary changes will it adversely affect them
  • If the formulary is balanced between benefiting plan sponsors, members, and the PBM
  • Where the PBM might be steering towards

Providing Insight from Start to Finish

Information obtained from data analysis can directly impact pharmaceutical rebates by providing decision-makers insight into adherence and utilization, pharmacy performance, and most importantly, patient outcomes.

This diverse and complex process involves multiple key players including; PBMs, providers, pharmacies, Benefits Consultants, plan sponsors, TPA’s, and health plans. That’s why it’s important to have information that covers all sides and why Xevant’s innovative platform is so paramount.

Xevant provides insight for every contributor so that well-rounded decisions can be made. By automating daily claim information in real-time, instant data trends can be realized and areas of improvement made clear. No matter your role, Xevant can help from start to finish.

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Laura Phillipson

Director, Client Success

Laura Phillipson is a client management expert with experience managing client services teams. Her past roles include Sr. Client Services Executive for Navitus and over a decade of experience as a Certified Pharmacy Technician. Laura’s career in client relations spans nearly two decades. An avid sports fan, Laura excels in helping clients create a strong strategy with a competitive edge. Laura’s extensive background in both customer service and the medical field provides an ideal blend to lead client management for Xevant.

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