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The federal investigation into pharmacy benefit managers' dealings comes at a time when the industry is more consolidated than ever. The Federal Trade Commission inquiry could lead to more restrictive policies and to sanctions against PBMs, along with other players in the pharmaceutical marketplace, legal experts predicted. But the industry has tools at its disposal to delay or weaken the probe. Combined, UnitedHealth Group's OptumRx, Cigna's Express Scripts and CVS Health's Caremark control nearly 80% of the prescription drug market and heavily influence the prices for and access to medications. Through decades of mergers and acquisitions, the three PBMs are part of of vertically integrated behemoths with significant presences in sectors such as health insurance, pharmacy and providers. In recent years, they have sought greater control over prescription drugs by launching offshore group purchasing organizations, which serve as rebate aggregators for other PBMs. These new ventures add another layer of complexity and further limit competition, said Antonio Ciaccia , CEO of drug pricing research firm 46brooklyn Research and president of 3 Axis Advisors. "Even ones that on paper might look like competitors, they're often using some of the services that the large PBMs provide," Ciaccia said. "We look at PBMs as if they're only PBMs, and they're just not." The FTC will require CVS Health, UnitedHealth Group, Cigna, Humana, Blue Cross and Blue Shield-affiliated Prime Therapeutics and MedImpact Healthcare Systems to disclose information about their business practices, the agency announced last week. Prime Therapeutics said it intends to cooperate with the FTC. OptumRx and CVS Caremark referred questions to the Pharmaceutical Care Management Organization, a trade group. The trade group did not make anyone available for an interview, but is confident the FTC's inquiry will validate that PBMs reduce consumer drug costs and blames high prescription prices on drug manufacturers, a spokesperson wrote in an email. Cigna declined to comment. Humana and MedImpact Healthcare Systems didn't respond to interview requests. The evidence on whether PBMs help patients and providers is mixed. Researchers at the University of Southern California linked the larger rebates that PBMs often demand to rising drug prices. But Centers for Medicare and Medicaid Services actuaries reported that rebates constrain drug spending growth. The FTC's inquiry didn't surprise those who follow the pharmacy benefit manager industry, said Margaux Hall, a partner at law firm Ropes & Gray. "We've seen whispers of that for quite some time." A history of M&A
The pharmacy benefit manager model originated as a way to aggregate pharmaceutical buyers into purchasing groups that would have greater leverage with drug manufacturers. The drug company Merck saw owning a PBM as a means of getting its medications on health insurance formularies and purchased MedCo Containment Services for $6 billion in 1993. The deal inspired other drugmakers to follow suit. In 1998, the FTC forced Merck to have an independent group monitor its formulary decisions because officials were concerned Merck would favor its own products. "Part of the reason that federal officials went nuts about it is it's an inappropriate and unethical relationship when the PBM—which is ultimately able to determine which drugs are covered and which ones aren't—can be swayed by the conflict that exists with the drugmaker wanting more and more of their drugs to be sold," Ciaccia said. "How is that any different from our current system of rebating?" Ciaccia said. The way PBMs and pharmaceutical companies use rebates poses similar conflicts of interest and allows drugmakers to pay PBMs to prioritize their medicines on formularies, he said. The next landmark PBM acquisition came in 2006, when CVS announced it would buy Caremark Rx for $21 billion. That vertical integration enabled the PBM to prioritize CVS pharmacies over other drugstores and increase CVS' market share, said Linda Cahn, an attorney who audits PBM contracts and who filed the first federal lawsuit challenging drug manufacturer ownership of PBMs in 1995. CVS Health's 2018 acquisition of insurer Aetna mirrored the evolution of Cigna and UnitedHealth Group, which comprise insurance and pharmacy benefit management divisions. Regulatory landscape
PBMs have enjoyed scant federal oversight since their inception. A 2004 FTC report concluded that "vigorous competition" was more likely than regulation to promote transparency in the PBM industry. The drug rebates PBMs negotiate are exempt from anti-kickback and Stark laws, which essentially forbid companies from making or receiving payments or other incentives as part of purchasing deals. The Health and Human Services Department finalized a rule to end PBMs' anti-kickback safe harbors in 2019, but a federal court's order required HHS to delay the rule until 2023 after the Pharmaceutical Care Management Organization sued. "PBMs kind of fly under the radar because they're neither an insurance company nor a healthcare provider," said Lucas Morgan, an associate at law firm Frier Levitt. "There was a belief that there was sufficient regulation of the appropriate entities, combined with not completely understanding the role that PBMs played." The Affordable Care Act requires PBMs to disclose to the federal government and health insurance companies information about rebates, compensation and how many prescriptions they dispense. CMS also indirectly regulates PBMs through their Medicare Part D plan sponsors. In the absence of stronger federal oversight, states have taken action. In 2020, the Supreme Court ruled that federal law didn't prevent Arkansas from regulating how PBMs pay pharmacies, which empowered more states to implement laws and rules governing the companies. In 2021, more than 20 states introduced PBM-related legislation or regulations, according to law firm Mintz. Over the past few years, states have targeted OptumRx, Express Scripts and CVS Caremark with lawsuits alleging they overcharge public programs. Closer scrutiny
Momentum at the state level appears to be spreading to the federal government. The FTC will give the six companies 90 days to report information that includes minutes of board meetings, participation restrictions for pharmacy networks and lists of specialty drugs on their formularies. The PBMs have 14 days from when they receive the FTC's orders to raise concerns about the information they are instructed to collect and submit. The companies will likely use that time to push back on which information they must release to the FTC, Morgan said. The PBMs may initiate legal challenges that could limit what the FTC is able to gather, Morgan said. "We're going to end up seeing not just a request for an extension of time, but some agreement between the FTC and the PBMs that is going to allow for far longer extensions with the agreed upon, mutual goal of getting as much information as possible," he said. If the FTC's probe stands up to potential legal challenges and uncovers evidence of anticompetitive behavior, the agency could fine PBMs or restrict certain business practices, Morgan said. The agency also could take more extreme measures, such as unwinding past mergers. PBMs may consider proactively altering their business practices to reduce the pressure, Morgan said. "If I were thinking smartly about this, I would think, 'Are there any immediate steps we can take that might take the spotlight off us a little bit?'" he said. Depending on what the investigation reveals, other companies in the pharmaceutical supply chain may also attract federal attention. The FTC study could provide insights into other aspects of PBMs' diversified businesses, or shed light on contracts with pharmacies, for example. That would be appropriate, said Anne Winter, senior managing director at FTI Consulting who formerly was a senior director at CVS Caremark. "You can't look at one segment of the supply chain without really understanding that there are so many moving parts to it. You can't just find fault with one piece of it." Investors seem unconcerned about the FTC investigation so far. Share prices for UnitedHealth Group, Cigna and CVS Health have remained in line with broader market trends since regulators announced the investigation. Letter

Federal PBM probe culminates decades of M&A

Customized machine learning tools and technology tailored for the Canadian market help detect and prevent prescription fraud early
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March 18, 2021 08:00 AM Eastern Daylight Time
TORONTO--( BUSINESS WIRE )--To help employers and health plans gain more control over fraud, waste, and abuse (FWA), MedImpact Canada Limited and SEB Administrative Services Inc. are launching an advanced analytics and reporting solution to combat FWA in Canada. The solution, powered by machine learning and artificial intelligence (AI), promotes payment integrity, compliance, and member safety. Healthcare FWA runs the gamut from minor one-time overpayments to highly sophisticated criminal networks embezzling millions of dollars that result in higher healthcare costs, inappropriate clinical care, and tax administrative resources. In Canada alone, industry experts estimate 2% to 10% of every healthcare dollar is lost to fraud, costing $600 million to $3.4 billion annually.1
“Traditional strategies to identify and mitigate FWA are no longer effective in today’s ever-evolving, high-cost healthcare landscape,” said Dan Parrish, Vice President, Underwriting & Pharmacy Analytics at MedImpact Healthcare Systems. “AI and machine learning analytics are imperative as a first step in identifying potential discrepant claims.”
In an effort to bring bold, time-tested solutions and innovative technology to Canadian employers and health plans, MedImpact Canada Limited formed a strategic business alliance with SEB Administrative Services (SEB Admin), a wholly owned division of Smart Employee Benefits Inc., to leverage the services of MedImpact Canada Limited’s affiliate MedImpact Healthcare Systems Inc. — the largest independent pharmacy benefit manager (PBM) in the U.S.
With more than 30 years of pharmacy benefit expertise, MedImpact Healthcare Systems customized the FWA pharmacy solution to meet the needs of Canadian employers and health plans. MedImpact Canada Limited is working with SEB to bring it to the Canadian market. Through AI and machine learning, the tailored solution captures and analyzes pharmacy dispensing patterns in Canada to help address Canada’s unique FWA challenges. The FWA solution is the first of multiple MedImpact solutions applicable to the Canadian marketplace. “There is no independent pharmacy focused solution like this in Canada today,” said Mohamad El Chayah, COO of SEB and President/CEO of SEB Admin. “Our relationship with MedImpact Canada Limited allows us to unlock and extract exponential value to Canadian benefit plans by introducing proven AI solutions to combat FWA in the Canadian marketplace. This further emphasizes SEB’s efforts to provide Canadian public and private plan sponsors leading edge solutions that best optimize plan sponsor dollars to the benefit of plan members.”
FWA Analytics as a Service (AaaS) claim-level outlier scoring and rules flags monitor all activity to help ensure appropriate payments and clinical safety while summary reports track utilization and trends, providing plans:
Comprehensive Oversight by continuously monitoring all claim activity to help ensure erroneous claims are not paid
Loss Mitigation by streamlining early identification of potentially suspicious activity
Investigative Efficiency by allowing plans to focus resources on high-risk activity with flags and scores generated by a data-driven, AI-powered outlier detection solution
Insightful Reporting that helps plans stay ahead of emerging schemes by identifying high-risk trends and systemic issues through summary level reports
A global crisis
FWA is a worldwide healthcare crisis that costs an estimated $415 billion and accounts for 7.29% of total global healthcare spending every year, according to the World Health Organization.2
“Internationally, fraud and overutilization of finite healthcare resources plague private and public payer systems — and Canada is no exception,” said Amar Mahmood, MD, PhD, General Manager, MedImpact International, an affiliate of MedImpact Canada Limited. “Prescriptions are the most prevalent intervention modality in healthcare. MedImpact employs the technologies to uncover hidden patterns across prescription data to effectively mitigate FWA and respond faster, should it occur.”
About Us
MedImpact Canada Limited
MedImpact Canada Limited is pleased to offer this FWA Analytics as a Service product to SEB’s clients through our strategic business relationship with SEB. Through this offering, Canadian entities will have the opportunity to benefit from PBM solutions targeting FWA, including holistic and coordinated data analytics, due to the relationship between MedImpact Canada Limited and its healthcare industry leading affiliates, such as MedImpact Healthcare Systems, Inc.
MedImpact Healthcare Systems, Inc.
MedImpact is the PBM that puts clients and consumers first. Always. For 30 years, we have had a single mission: To help make pharmacy benefits affordable, understandable, and honest. Today, our team and technology serve many large employers and plans and more than 55 million consumers in the U.S. and around the world. We are an independent company that answers to our clients, consumers, pharmacy partners, and employees — not Wall Street or a corporate parent. We are passionate about providing access to the lowest cost prescriptions. Learn more at medimpact.com or follow us on Twitter @MedImpact . About SEB Administrative Services Inc.
SEB Admin is a third-party administrator (“TPA”) providing leading edge cloud based, fully bilingual, benefit processing solutions using SEB Admin’s proprietary technologies and custom solutions and services of Partners. SEB Admin’s “FlexPlus” ecosystem provides single sign-on connectivity for all group benefit stakeholders. Over $1 billion of premium is managed in the FlexPlus ecosystem. FlexPlus has over 20 modules supporting multiple revenue models, capturing and automating over 90% of all benefit processing activities for all benefit types. Each module can operate standalone or as an integrated solution. SEB Admin manages benefit plan environments for over 400,000 employees for more than 50 of Canada’s name brand companies and government entities and has reached agreements through its “Channel Partner” business model to white label its FlexPlus TPA solutions for over 150,000 additional plan members. FlexPlus cloud enabled solutions support all plan designs – traditional, flex, cafeteria, hour bank, dollar bank, marketplace – via co-sourced, fully outsourced or SaaS models. For further information about SEB Administrative Service Inc., please visit: http://www.seb-admin.com/ . About Smart Employee Benefits Inc.
SEB is a technology company providing Business Process Automation and Outsourcing software, solutions, and services to a national and global client base. SEB has a specialty growth focus in cloud enabled processing solutions for managing employer and government sponsored benefit plans on a BPO (Business Processing Outsourcing) business model, globally. SEB currently serves corporate and government clients across Canada and internationally. Over 90% of SEB’s revenues derive from government, insurance, and health care organizations. SEB’s technology infrastructure of over 650 multi-certified technical professionals, across Canada and globally, is a critical competitive advantage in supporting the implementation and management of processing solutions into client environments. SEB’s Managed Services & Solutions can be game changing for SEB clients, turning cost centers into profit centers. For further information about Smart Employee Benefits Inc., please visit: http://www.seb-inc.com/ . 1 Canadian Life and Health Insurance Association: https://www.canadianfraudnews.com/medical-insurance-fraud-widespread-as-employees-providers-rip-off-benefit-plans/
2 World Health Organization: https://www.who.int/bulletin/volumes/89/12/11-021211/en/
Contacts

MedImpact and SEB Bring Artificial Intelligence FWA Solution to Canada

September 24, 2020 08:00 AM Eastern Daylight Time
SAN DIEGO--( BUSINESS WIRE )-- MedImpact today announced a new solution that integrates prescription discount card savings with traditional plan prescription benefits. This solution will provide health plans with a more complete view of member utilization and adherence, while reducing the cost of prescriptions for members. “Tracking adherence is essential for health plans to improve health outcomes, CMS Star Ratings, and competitiveness,” said Dale Brown, President of MedImpact Healthcare Systems . “This solution will give health plans the ability to integrate funded and unfunded claims to lower costs, improve health data and outcomes, and simplify the entire process for consumers.”
Over the past few years, prescription savings programs have skyrocketed in popularity. In particular, as copays and deductibles rise, the price of medications with a discount program may be less than the insurance out-of-pocket cost for the same drug. As a result, consumers are bypassing their prescription insurance and purchasing medications -- including drugs that are on their plan’s formulary -- with cash. According to a recent online poll conducted on behalf of MedImpact, involving 500 people with insurance coverage, 25% of respondents said they have used a prescription savings program within the past year; 8% said they use it every time they go to the pharmacy. For insurers, this is resulting in significant gaps in data on member health, utilization, and adherence. MedImpact’s integrated solution will offer health plans the opportunity to adapt to this fast-moving trend in consumer behavior and capture critical information that they cannot access currently. In addition to capturing claims data, funded plans will also be able to apply cash claims to the member’s deductible, consistent with applicable law and the terms of the individual plan. This has the potential to provide members with lower annual drug costs and a better pharmacy benefit experience. “Managing overall prescription costs shouldn’t be so complicated,” said Brown. “Members with funded benefits will be able to use their benefits card with the confidence knowing that they will receive the lowest out-of-pocket cost each time they go to the pharmacy.”
MedImpact’s integrated solution will be ready for implementation in 2021. About MedImpact
MedImpact is the PBM that puts clients and consumers first. For 30 years, it has had a single mission: To make pharmacy benefits affordable, understandable, and transparent. Today, MedImpact’s team and technology serve many large employers and plans, and more than 55 million consumers in the US and around the world. Learn more at medimpact.com or follow us on Twitter @MedImpact .

MedImpact Integrated Solution Helps Plans Reduce Member Drug Costs and Obtain More Complete Data on Utilization, Adherence

Frederick Howe
Chairman and CEO, Medimpact Healthcare Systems Inc.
SDBJ 500 recap: Frederick Howe founded MedImpact Healthcare Systems Inc. in 1989. Today, it is the nation’s largest private pharmacy benefit manager. Medimpact is building a second office tower on its campus in Scripps Ranch. Howe is also a senior advisor at SilverStream Capital LLC and a director of WorldDoc Inc. He once owned and operated a chain of six pharmacies. ALMA MATER

SD 500: Frederick Howe

Translational Software provides solutions to support physicians adopting personalized medicine. Its PGx Portal is a cloud-based solution providing clients with access to the company's proprietary knowledge base. Coupled with laboratory molecular data, it generates HIPAA-compliant reports for referring clinicians with recommendations and guidance on therapeutic options for patients' medication management.

Translational Software

`` We excited to announce our partnership with MedImpact Healthcare Systems , as it aligns with our broader vision of continuing to democratize precision medicine and specifically pharmacogenetics , '' said Don Rule , CEO of Translational Software .

Written by Michael Scholl | April 1, 2020 7:47 PM.
MedImpact Selects Translational Software to Launch a Pharmacogenetics Program.

Liquibase develops an open-source database change management solution. The company's solution helps teams release software faster and safer by bringing database changes into existing CI/CD automation without automation, CI/CD fails at the database. By using a repeatable process to easily create, validate, trace, and audit database changes from development through production, teams reduce security risks and costly errors.

Liquibase

Organizations are left with two options : 1 -RRB- dedicate resources to expand , customize , integrate and maintain Liquibase or 2 -RRB- shift to an enterprise , commercial offering , such as Datical .

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ExtraHop provides real-time wire data analytics through the company's digital platform. The company's operational intelligence platform analyzes all L2-L7 communications, including full bidirectional transactional payloads.

ExtraHop

`` ExtraHop is proud to partner with organizations like MedImpact Healthcare Systems , Inc. that leverage technology to drive better customer experience and value . ''

MedImpact Selects ExtraHop to Drive Innovation and Improve Customer Care

US Bioservices

Blink Health, formerly Vital Matters, helps patients get the right medicine at the lowest cost. The company is creating the first consumer-centered platform that translates big data insights into valuable savings and information for patients.

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MedImpact Healthcare Systems is a full-service Pharmacy Benefit Manager (PBM) that derives revenue by managing the drug benefit, not from dispensing drugs. The company uses information technology and human capital to improve the practice of managed care pharmacy. MedImpact partners with the nation's finest health plans, hospitals and employers to provide pharmacy benefit management services to more than 35 million members.

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