Employers Play a Big Part in Future Changes to Managed Care: John M. O'Brien, PharmD, MPH

John Michael O'Brien, PharmD, MPH, president and CEO of the National Pharmaceutical Council, discussed how managed care will change in the upcoming years, with employers being more engaged in the area than ever before.

This transcript has been lightly edited for clarity; captions are auto-generated.

Transcript

What changes do you see taking place in managed care over the coming years?

Again, one of the biggest changes that I see taking place is that employers are getting a lot more engaged, and they should be, because they pay about half of the country’s health care benefits. They’re starting to ask really tough questions about whether their benefits consultants are steering them toward formularies that cost more money, and that’s part of a broader trend where they’re starting to ask for more value for money for both drugs and medical services. This is a direct result of the work that Shawn Gremminger and the National Alliance of Healthcare Purchaser Coalitions are leading. I think he and Mark Cuban, Greg Baker, Jonathan Levitt, they’re all leading a charge to help educate and bring more information to employers.

Managed care is going to have to adapt and find a way to create value for employers that doesn’t create unwanted friction for employees who are patients. There’s a real backlash right now against the restrictions that payers place between a patient, their provider, and the appropriate and needed treatment that’s best for them. For example, look at the co-pay accumulators and maximizers or alternative funding programs; our recent work highlighted the negative impact of these programs and other cost-shifting programs on patients. When you look the new restrictions that we’re seeing from payers on nononcology medicines via the accelerated approval pathway, that prevents patients with rare diseases or conditions that have no available treatments from accessing something that they’ve been waiting a long time for. Again, this isn’t good for patients, so this is why I’m hopeful about the focus that I see in President [Donald] Trump’s executive order, when they talk about the value chain.

There’s a need for policy makers and employers and others to have a better understanding of the way that prescription drugs help patients get well, stay healthy, and avoid more costly care settings, rather than looking at them simply as a source of margin extraction. When I first got started in this industry, we used to see drugs compete based on which one had the most efficacy at the lower cost. The best drug at the lowest cost was the one that was on formulary. But that's not how it works today, and I think this is obvious when you look at the preference that middlemen are placing on high-cost, high-rebate products. So again, I think the [increase in] questions that employers ask about how this is working or not working for them is the biggest change that I see in managed care right now.