The Importance of Transparent Drug-Benefit Managers and Secure Health Data Connectivity

The Importance of Transparent Drug-Benefit Managers and Secure Health Data Connectivity

In recent news, both Foot Locker and a Teamsters fund in Philadelphia have made significant changes to their drug-benefit managers, highlighting the growing concerns over rising drug costs and the lack of transparency in the pharmaceutical industry. Foot Locker dropped UnitedHealth Group's OptumRx last year, while the Teamsters fund switched from CVS Health's Caremark to a new provider. Both employers and unions expressed their worries that the drug-benefit managers might be pocketing some of the rebates negotiated with pharmaceutical companies, leading to higher-cost drugs for their members.

This lack of transparency in drug-benefit management is a problem that many employers and unions face. Without knowing the fees and other sources of revenue of these managers, it becomes difficult for them to ensure they are getting the best deals for their members. However, the drug-benefit managers argue that they save their customers money and provide tailored options for their workers' needs.

The frustrations of employers and unions are starting to shake up the sector for controlling spending on retail prescription drugs. According to the Centers for Medicare and Medicaid Services, spending on retail prescription drugs is projected to reach $411.6 billion this year. To keep costs under control, drug-benefit managers negotiate with drugmakers over prescription prices and pass along the rebates they obtain. They can also exclude certain drugs from the list of covered medicines if they do not receive sufficient rebates.

Despite these efforts, retail drug spending under private insurance has increased by an average of 3% each year for the past decade. This raises questions about the effectiveness of current drug-benefit management practices.

However, there are alternatives to traditional drug-benefit managers that offer more transparency and cost savings. Foot Locker, for example, hired a smaller pharmacy benefit manager called Navitus Health Solutions, which promises to pass through 100% of the drug rebates it negotiates. In the first year after the switch, Foot Locker saw a 5% drop in drug spending. Similarly, the Teamsters fund opted for Capital Rx, which also agreed to pass through all negotiated rebates. The executive director of the fund described it as the "best decision ever."

In addition to the concerns surrounding drug-benefit managers, the issue of fragmented health data in the healthcare industry has also come to the forefront. Datavant, a leader in health data connectivity, recently closed its merger with Ciox Health and launched an expanded product suite called Datavant Switchboard. This product suite aims to provide a neutral, trusted, and ubiquitous infrastructure for the secure exchange of health data across thousands of healthcare institutions.

The fragmented nature of health data poses significant challenges for patient care, medical research, and healthcare costs. In order for institutions to exchange health data, they must have confidence in the compliance, security, and control of their data. Datavant's solution aims to address this problem on a large scale for the industry, allowing for improved patient care, accelerated medical research, and reduced healthcare costs.

In conclusion, the concerns raised by employers and unions regarding drug-benefit managers and the need for transparent and secure health data connectivity highlight the need for change in the healthcare industry. Employers and unions should consider exploring alternative drug-benefit managers that prioritize transparency and cost savings, as demonstrated by Foot Locker and the Teamsters fund. Additionally, the industry as a whole should embrace solutions like Datavant's Switchboard to overcome the challenges of fragmented health data and unlock the full potential of health data for the benefit of patients, researchers, and healthcare providers.

Three actionable pieces of advice:

1. Employers and unions should carefully evaluate the transparency and cost-saving measures offered by their current drug-benefit managers and consider alternatives that guarantee the passing through of negotiated rebates.
2. Healthcare institutions should prioritize the adoption of secure health data connectivity solutions, such as Datavant's Switchboard, to overcome the challenges of fragmented health data and unlock its potential for improving patient care, medical research, and reducing healthcare costs.
3. The pharmaceutical industry and drug-benefit managers should prioritize transparency in their operations, including openly disclosing fees and other sources of revenue, to build trust with employers, unions, and the general public.