After seeing drug costs rise ‘out of control,’ UNC Health started its own PBM

UNC Health has launched its own pharmacy benefit manager (PBM) to serve employers in North and South Carolina. UNC Health has been using this PBM to manage prescriptions for its own employees, and says it has cut costs by 32%.

Previously, UNC Health used one of the big three PBMs (CVS Caremark, OptumRx, Express Scripts), which manage 80% of prescriptions in the United States, according to a recent Federal Trade Commission report.

“Our costs were increasing year over year. They were kind of out of control, and there wasn’t really much that we could do about it,” said Penny DeFalco, executive director of UNC Health’s Managed Pharmacy Solutions. “And so we decided to just basically take on full responsibility.”

Managed Pharmacy Solutions has been managing prescriptions for 33,000 UNC Health employees since 2019. This year, it is aiming to expand across the Carolinas, primarily serving employers with 500 to 2,500 employees, DeFalco said.

DeFalco and her team had two goals when they launched the PBM — save money and improve patient outcomes.

Starting with incentives

How does UNC’s PBM save employers money compared to the big-three PBMs?

It starts with incentives.

While other PBMs focus on negotiating rebates from drug manufacturers in exchange for including a drug or drugs on the PBM’s formulary, UNC Health’s Managed Pharmacy Solutions focuses on obtaining drugs for the lowest price and passing those savings along.

“We’re not trying to chase after rebates,” DeFalco said. “We’re really trying to look at getting to the low net cost.”

And UNC’s PBM is transparent in its pricing. “There’s no hidden costs, and we’re doing everything in an all-inclusive admin fee,” said DeFalco.

‘Not trying to reinvent the wheel’

UNC Health’s PBM is also more directly involved with patients.

For example, when employees are on weight loss drugs, “they’re seeing a physician that specializes in weight loss management, they see the clinical pharmacist titrate the dose on the medication, and then they’re seeing a dietitian to manage their diet and exercise and things like that,” said DeFalco.

For patients traveling or who live outside of the Carolinas, Managed Pharmacy Solutions has a network of 65,000 pharmacies nationwide that includes CVS and Walgreens, as well as independent pharmacies.

Pharmacy costs have been “growing in leaps and bounds each year, and employers are really looking for ways to save money,” said DeFalco.

“We’re not trying to reinvent the wheel,” said Michael Lawrence, leader of business development and growth for UNC Health Enterprises. Instead, they want to be “an evolution of a model that has been around for a long time that, frankly, needs changing.”