Of course there's lots happening on the healthcare reform front, with the Senate currently considering the Better Care Reconciliation Act (aka Obamacare repeal). The big diabetes orgs have urged our D-Community to contact senators about this potentially harmful legislation. Meanwhile, the drug pricing crisis rages on.

Thanks to Dan Fleshler for his help with our continuing coverage of the complex American drug pricing system, in particular the middlemen role of Pharmacy Benefit Managers (PBMs) -- see also hashtag #PBMsExposed.

On Economic Clout in Healthcare, by Dan Fleshler

You’ve got to hand it to the Health Transformation Alliance (HTA), a group of 38 of America’s major corporations that are pressing for private-sector healthcare reforms in order to “fix our broken health care system.”

Certainly an ambitious goal, no?

Founded in February 2016 with the aim of lowering drug costs and improving employees’ health overall, this healthcare-focused alliance includes corporate giants like AMEX, Caterpillar, Coca Cola, IBM, Marriott, Shell and Verizon among the leading employers. Twenty founding companies with roughly four million employees were the founding members, and since then that number of companies has almost doubled as the group spent the first year recruiting members and formulating plans, just recently announced in April 2017.

Member companies and their employees spend about $26 million on health care, and their health plans cover about 6.5 million people. Because the HTA’s companies are so big, the changes they bring about have the potential to impact other employer-based plans, covering roughly 55% of Americans on health insurance.

In a recent interview I conducted with the HTA’s Chief Executive Officer Rob Andrews, he explained what this group’s initiatives could mean to people with diabetes (PWDs) in the U.S.

“We have both an economic and a moral obligation to change the way healthcare is priced and delivered,” Andrews said, pointing to the increasingly high costs to both individuals and the corporations that employ them.

Even if you believe Big Business is driven only by the profit motive and couldn’t care less about people’s health and well-being, it would be hard to argue that PWDs won’t benefit if the HTA achieves its goals:

• Lowering prescription drug costs through a change in the current Pharma pricing system. They are especially interested in altering member companies’ relationships with Pharmacy Benefit Managers (PBMs), the middle-men who have taken heat lately for their role in high drug prices such as insulin;
• Using data-driven analytics to better understand how to improve health outcomes and then translating that knowledge into action;
• Setting up new networks to deliver personalized health care.

"Troubling” Prices

The prices that companies and employees are paying for insulin are “very troubling” and “not fairly set,” Andrews says. The HTA’s goal is to make the price “more closely aligned with market realities, not just something that someone can get away with.”

One step the HTA is taking to change the drug pricing system is a three-year contract with two PBMs: CVS Health and OptumRx. That was announced in April. Much of what Andrews says they want to accomplish with this initiative is precisely what diabetes advocates, some Congressional efforts like the Prescription Drug Price Transparency Act and the newest Stop Pricing Gouging Act, and even state lawmakers are pushing for: transparency in drug pricing.

Right now, we all know it's a sort of black box of insulin pricing, as the contracts that PBMs sign with drug manufacturers and other players are kept confidential. Even the health plan sponsors who hire the PBMs don’t have access to them and that makes the employers (you know, the ones hiring PBMs) unhappy. Audit rights would be a way to force more transparency, Andrews says. “If you’re buying a house, you need to know if it has termites in it,” he explains.

Changing Formularies

The HTA also wants “a seat at the table” in the creation of formularies -- those all-important list of "top-tier" medicines and supplies, Andrews says. Although these companies may already have their seats reserved, as they are the PBMs’ most important clients, it seems the employer group wants to keep its elbows on the table and be able to make more demands than they’ve been used to making during this process.

Sure, some diabetes advocates are already pushing for this kind of action from employers. Rick Phillips, who used to be a health plan administrator, advocated this persuasively in an interview we published in May. Advocates are also pushing for insulin to be deemed an “essential medication,” able to get placement on formulary tiers currently reserved for the cheapest drugs.

While Andrews wouldn’t endorse that specific recommendation, he did say the HTA would “take a look at shifting formularies so they are more effective,” because the employer group doesn’t want employees to pay exorbitant prices for medications.

Andrews envisions a time when “every employee will have pharmacogenetic testing” that will yield “highly personalized treatment plans” and could eventually lead to personalized formularies.

“If a drug is effective for an individual, the physician would be given incentives to prescribe it,” he said.

Whoa, personalized formularies?! That should be music to the ears of people in the diabetes community, where “Your Diabetes May Vary” is a popular, wise slogan.

But won’t all of this mean a radical change in how prescription drugs are currently priced?

Use the word “radical” when talking to most corporate spokespeople and they will run for the hills. Not Andrews. He didn’t seem to flinch.

“The change we are looking for will definitely be disruptive,” he said.

IBM Watson Tackling Diabetes

One of the HTA’s most intriguing moves hasn’t gotten much publicity and is directly relevant to people with diabetes -- and at risk of developing it. The group is working with Cigna and UnitedHealthcare to establish healthcare networks that will focus intently on type 2 diabetes, hip and knee replacements, and back pain (which add up to about 40% of the HTA members’ healthcare spending). This is scheduled to get off the ground at the start of 2018, in three key demographic pilot areas: Dallas/Ft. Worth, Phoenix and Chicago.

This initiative will take advantage of the Artificial Intelligence software of IBM’s Watson Health, which will analyze data and “identify treatment plans” that work to prevent T2D. Remember, IBM Watson is the computer brain that beat out two human contestants on Jeopardy years ago. In the D-tech universe, IBM Watson is now partnered up with Medtronic Diabetes on its Sugar.IQ app and others in healthcare. This HTA partnership is just the next step for Watson Health, it seems.

Andrews hopes that data generated by Watson would also yield insights that could help people treat and manage T1D, T2D and other chronic diseases.

Banking on Economic Clout

As promising as the HTA's plans are, this of course won't be a cure-all for our broken system.

If employer-provided insurance plans do change and healthcare costs are reduced, it will mean more money in corporate coffers. But it’s not yet clear how much the improvements will help us working stiffs ourselves. And of course, even if the HTA gets everything it wants, it won’t do much good for people who need to buy their own health insurance or rely on Medicaid or Medicare – that’s still a big chunk of the insurance market.

And clearly, if your reaction to the HTA’s initiatives is “What took you so long to get into this game?,” no one would blame you. Employers could have taken these steps a long time ago, so yes, they share some responsibility for the mess our system is in now.

Still, Andrews offers a glimmer of hope that at least some positive, concrete changes are possible. Collectively, the HTA’s member companies have something that is sorely lacking among proponents of sensible healthcare reforms in this country: economic clout.

When a group of heavy-hitting corporate employers says it wants to transform healthcare, it’s tough to look the other way -- meaning it's hopefully going to be very difficult for PBMs, Big Pharma, Federal and State Government to ignore them.

Thanks for all the great work, Dan. Such an intriguing development to see major employers finally taking on this issue.