The Intersection of Innovation: Unbundling the PBM Model and the Rise of Generative AI in Healthcare

Ben H.

Ben H.

Aug 30, 20234 min read

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The Intersection of Innovation: Unbundling the PBM Model and the Rise of Generative AI in Healthcare

Introduction:

In the rapidly evolving landscape of healthcare, two significant developments have caught the attention of industry leaders and stakeholders. Blue Shield of California's announcement to transform the pharmacy benefit management (PBM) model and the emergence of generative artificial intelligence (AI) in healthcare have sparked discussions and debates. While both initiatives aim to reshape the industry and improve patient outcomes, they also face challenges and uncertainties. In this article, we will examine the common points between these two advancements, explore their potential impact, and provide actionable advice for healthcare organizations.

Unbundling the PBM Model:

Blue Shield of California's decision to unbundle the PBM business model has garnered attention and curiosity. However, upon closer examination, it becomes clear that the model is not entirely novel. Various entities, such as employers, health plans, independent PBM companies, and pharmacies, have been performing different functions of pharmacy benefit management for years. Blue Shield's role as a general contractor for a subset of PBM services may not be as disruptive as initially perceived. It is essential to temper our enthusiasm and recognize the reliance on existing PBMs.

The Role of Amazon Pharmacy:

Amazon Pharmacy's entry into the market as an in-network mail pharmacy has generated significant buzz. However, it remains uncertain whether beneficiaries will be able to access Amazon Prime subscription pricing through Blue Shield's arrangement. Additionally, Mark Cuban's Cost Plus Drug Company offers pricing at the pharmacy pick-up counter, but its limited acceptance may hinder widespread adoption. The challenge for beneficiaries lies in navigating different pricing options and ensuring transparency in the face of evolving models.

The Involvement of Abarca, Prime Therapeutics, and CVS Caremark:

Abarca's role in claims processing, Prime Therapeutics' negotiation of rebates, and CVS Caremark's provision of specialty pharmacy services add further complexity to Blue Shield's initiative. While Abarca's cloud-based PBM platform and Prime Therapeutics' rebate negotiation are notable, questions arise regarding the ability to secure better deals as a regional plan with a limited number of beneficiaries. Furthermore, the reliance on CVS Caremark, despite previous terminations, raises concerns about the control of prescription pricing, especially for specialty drugs. The potential for beneficiary confusion and comparison shopping across different providers adds another layer of complexity.

The Rise of Generative AI:

While Blue Shield's endeavor focuses on transforming the PBM model, healthcare leaders are also grappling with the implementation of generative AI. Bain's report reveals that only 6% of health systems have a comprehensive generative AI strategy. Resource constraints and a lack of technical expertise pose significant barriers to implementation. However, there is widespread excitement about the potential of generative AI to reduce administrative headaches and reshape the industry.

Navigating the Challenges of Generative AI:

To overcome the challenges associated with generative AI implementation, organizations should focus on established and accepted use cases. One such use case is the ability of generative AI to compose clinical notes after a patient visit, streamlining the documentation process. Collaborating with established companies like Nuance, Abridge, and Augmedix, which offer solutions for inputting draft clinical notes directly into electronic health records, can provide a starting point for healthcare organizations.

Actionable Advice:

  • 1. Prioritize transparency and pricing clarity: As the PBM model evolves, ensure that beneficiaries have access to clear and transparent pricing information. Consider partnering with smaller, more transparent PBMs to provide better pricing options.
  • 2. Invest in AI talent and expertise: Overcoming the resource constraints and technical expertise barriers associated with generative AI requires investing in talent acquisition and retention. Building a strong AI division can help organizations navigate the complexities of implementation.
  • 3. Start with established use cases: To leverage the benefits of generative AI, focus on proven use cases like clinical note composition. Partnering with established companies in the field can provide guidance and support in implementing these solutions.

Conclusion:

The unbundling of the PBM model by Blue Shield of California and the rise of generative AI in healthcare represent significant advancements in the industry. However, both initiatives face challenges and uncertainties. By prioritizing transparency, investing in AI talent, and starting with established use cases, healthcare organizations can navigate these complexities and harness the potential of these innovations. It is crucial to approach these advancements with cautious optimism, recognizing the need for continuous evaluation and adaptation in an ever-evolving healthcare landscape.

Resource:

  1. "A Reality Check on That Blue Shield of California Announcement", https://www.drugchannels.net/2023/08/a-reality-check-on-that-blue-shield-of.html (Glasp)
  2. "Only 6% of health systems have generative AI strategy: report", https://www.modernhealthcare.com/digital-health/generative-ai-healthcare-strategy-bain-company-report (Glasp)

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