Pharmacy benefit managers (PBMs) have developed a new approach to marketing themselves as stewards of the self-funded employers’ healthcare benefit, and it is having direct negative consequences for patients. Under the alternate funding program, new or costly therapies used to treat serious and chronic conditions, including cancer, are being singled out. PBMs are recommending that self-funded employers carve out coverage to their employees for these treatments. The result is the postponement of therapy while patients, providers, and PBMs search for funding from other sources.
The Rationale for Alternate Funding Programs
PBMs are citing the high cost of specialty drugs and the financial burden that they can place on patients and self-funded employers as justification for the use of alternative funding programs. In October 2021, a Forbes article profiling the practice noted that, “There are hundreds of unique specialty drugs, in more than 40 therapeutic categories and specialty disease states....specialty drugs can cost patients thousands of dollars.”1 PBMs claim that by applying alternative funding programs, they can essentially match specialty drug costs with organizations that provide potential funding for these medications. Some alternative funding programs are run by separate entities that aggregate information on funding sources and advertise up to 70% savings off a plan sponsor’s current specialty drug costs.2
How Does an Alternate Funding Program Work?
PBMs develop a list of specialty medicines that are typically already subject to prior authorization, medical necessity, and clinical program rules; these drugs are then specifically excluded from coverage under the self-funded employer’s pharmacy health plan.2 If it is determined that a participant needs 1 or more of these noncovered specialty medications, care is automatically denied and the participant is moved into a process to pursue financial coverage from another source, thereby shifting the cost away from the employer’s health plan.2
What Is the Impact on Patients?
Patients face delays in their care and must endure the stress of learning that the appropriate treatment for their condition has been denied. They are then faced with the burden of having to discuss their financial and medical situations with an external entity (or several entities), who must search for funding sources for the medication. If the funding sources are not identified, the patient may face additional hurdles and steps, which can result in disease progression and a decline in health status. In some cases, the employer ends up covering the treatment after all, but precious time will have been lost in getting the patient started on therapy.
Physician practices and cancer centers, with their deeply entrenched networks for seeking support for patients in need, will find themselves in competition for scarce funding sources. If patients who would ordinarily have been insured are now forced to seek alternate financial resources due to the intrusion of the denials and cessation of coverage by self-funded employers, these funding sources will not be available for other patients who lack insurance or financial resources of their own. The difference here is that insured patients usually need minor support for expenses not covered by their insurance benefits, thereby spreading the costs of treatment between themselves, the insuring employer, and the funding source. When an insured patient is forced to seek help due to a carve-out policy for specific treatments, the alternate funding program accrues financial savings to the insurer/employer that did not cover any of the costs at the risk of quickly draining the limited assets of funding sources for others.
Alternative funding programs methodically seek to find funds from sources such as private foundations primarily established by pharmaceutical companies—grants; public charities; state, county, and municipal programs; and state specialty access programs.2 These programs were established to assist individuals with their own cost of care, and in some cases, to provide drugs free of charge when patients had no other available options and were at risk of losing access to necessary treatments. They do not have sufficient funds to support programs that deliberately withhold previously available insurance coverage for the financial benefit of corporations and PBMs.
What Can Practices Do?
My suggestion is to track the stories of patients and document how alternate funding programs are affecting their treatment and access to care. These may include the following:
- Patients who have been placed under these programs. What is the actual emotional, financial, physical, and medical impact of the automatic denial and subsequent search for funds process? Which employers? How long is treatment delayed? How often is the patient denied, then after an unsuccessful funding source search, reinstated by their employer for coverage they should have had all along? How did the alternative funding program affect the patient’s ability to receive timely and effective treatment for their disease?
- Patients who have lost access to scarce funding sources because funds have been taken by these alternative funding program models. What has been the toll on these patients? Were they pushed aside and not able to receive the care they needed?
- Is this a growing phenomenon in your market? I have heard of increased utilization of alternate funding programs in Michigan, upstate New York, and the Massachusetts area, driven by aggressive brokers and PBMs pushing these programs to their self-funded employer customers.
If you see something, say something. Please share these experiences with me at
References
- Adams R. How alternating funding programs can ease the cost burden of specialty drugs. October 13, 2021. www.forbes.com/sites/forbesbusinesscouncil/2021/10/13/how-alternative-funding-programs-can-ease-the-cost-burden-of-specialty-drugs/?sh=42987639595b. Accessed November 15, 2021.
- Campbell G. Emerging alternative funding programs. www.cobaltrx.com/post/emerging-alternative-funding-programs. Accessed November 15, 2021.