The University Record, June 17, 2002

AdvancePCS named University pharmacy benefit manager

By Kate Kellogg
Benefits Office

The University has selected AdvancePCS as the vendor for the new 2003 U-M-managed prescription drug program. A leading national pharmacy benefit manager (PBM), AdvancePCS will partner with the University in administering the prescription drug portion of all U-M medical insurance plans.

In March of this year, the University announced the decision to consolidate pharmacy purchasing under a single PBM. As of Jan. 1, 2003, faculty, staff and retirees will receive prescription drug coverage through a new pharmacy benefit plan that is separate from University medical plans.

AdvancePCS has more than 30 years of experience in providing pharmacy benefit services. The PBM serves about 75 million members of health care plans, including M-CARE, and manages more than $21 billion annually in health care expenditures. A three-year contract period has been negotiated with the company.

The Benefits Office selected AdvancePCS from three finalists representing the largest, most experienced and sophisticated PBMs in the United States market.

Criteria for selection included:

  • The most competitive financial pricing and rebate structures

  • A comprehensive pharmacy network that will minimize any disruption to members

  • Ability to be a true business partner with U-M and its internal experts for future plan customization

  • Ability to customize the PBM’s Preferred Drug List (PDL) to U-M specifications

  • Demonstrated experienced account team that could ensure a smooth transition into the new drug plan.

    “We look forward to working with AdvancePCS as we implement and administer the University’s new prescription drug plan,” said Marty Eichstadt, director of the Benefits Office. “Our goal is to ensure cost containment and the future of a quality prescription drug benefit for faculty, staff, retirees and dependents.”

    Two key committees will assist the University in implementing the new pharmacy benefit plan. The newly established Prescription Drug Program Oversight Committee (PDPOC) will have responsibility for monitoring quality of prescription drug delivery and patient outcomes, determining future plan design, and ensuring privacy protection of patient information. The PDPOC also will conduct the final review of the University’s Preferred Drug List (PDL).

    A second committee, the Pharmaceutical Benefit Advisory Committee (PBAC) will report and make recommendations to the Oversight Committee. The PBAC will assist the Benefits Office in the administration and management of the University’s pharmacy benefit plan.

    The 12-member PDPOC represents a broad cross-section of the University community, including the retiree population and faculty (see PDPOC Membership). Members from areas such as pharmacy, medicine, nursing and public health policy will contribute their expertise to the University/PBM working relationship.

    “Pharmacy benefit management companies have a broad range of educational and intervention services. One of our jobs will be helping the University decide which parts of those programs would best serve our population, based on our understanding of needs and priorities,” said John E. Billi, associate dean for clinical affairs in the Medical School and associate vice president for medical affairs. Billi chairs the Oversight Committee.

    “The committee also can help the University determine which approaches strike the right balance between individual autonomy in drug choice and conservation of resources to the benefit of the entire community.”

    In cooperation with the PBM, the Oversight Committee will safeguard confidentiality of pharmacy data to make certain it is shared only with individuals who need such information to administer the program.

    Since a single PBM will manage prescription drugs for all plans, the committee will need to oversee appropriate sharing of pharmacy data with employees’ general health insurance plans. Whether those are HMOs or other types of insurance, all plans have their own quality improvement programs that need pharmacy data to operate efficiently, Billi explained.

    “For example, an HMO may have programs to make sure all coronary disease patients are on beta blockers or that patients who are on antidepressants have follow-up visits. The plan requires pharmacy data to implement those programs. You can’t achieve modern quality improvement without integration of health services and prescription drug data.”

    The committee will review drugs included on the University’s preferred and non-preferred drug lists, as evaluated by the Pharmaceutical Benefit Advisory Committee. The Oversight Committee will recommend changes, as needed, for consistent coverage for all pharmacy benefit plan members.

    The PBAC will be comprised of primary care and specialty physicians, pharmacists and other health care professionals appointed by the Oversight Committee. The PBAC will be responsible for:

  • Developing, managing, updating and advising on the administration of the University’s Preferred Drug List (PDL)

  • Coordinating Communications with the Oversight Committee and the Benefits Office regarding the PDL administered by AdvancePCS and used by all University health plans

  • Evaluating and recommending other benefit design strategies to promote cost-effective medication use

  • Evaluating and recommending clinical management strategies that enhance effective prescribing and dispensing practices and appropriate consumer use of prescription drugs

  • Analyzing data and feedback from providers and consumers to determine if the pharmacy benefit plan’s strategies and design are achieving optimal, cost-effective medication use.

    The PBAC will hold regular meetings to review and evaluate prescription drugs for the PDL. In conducting the evaluation, the PBAC will look at medical literature, clinical trials, economic data, patient and provider program experience data, and provider recommendations. The committee will first evaluate medications for therapeutic effectiveness. When two or more drugs are equally effective, then the committee will consider cost, supplier services and ease of delivery in determining which medications are included on the PDL.

    The membership of the Pharmaceutical Benefit Advisory Committee will be announced later this summer.

    Both committees will contribute to the University’s ongoing review of the PBM services. “We’ll look at the satisfaction levels of everyone in the supply chain, from physicians and pharmacists to patients,” said Keith Bruhnsen, assistant director of the Benefits Office and a member of the Oversight Committee. “We’ll examine the billing process, communications, the handling of exceptions and all the pieces of the pharmacy program that are designed for good drug therapy management.”

    In short, the University wants to ensure that “each patient is receiving the right drug in the right amount at the right time.”


    Annual Out-of-Pocket Maximum

    The University has lowered the prescription drug annual out-of-pocket maximum for all faculty, staff and retirees in the new 2003 prescription drug plan. The new limit is $2,500 per individual per year and $4,000 per family per year, excluding any annual deductibles.


    Update on Co-payment

    Several University collective bargaining units (AFSCME, IUOE, and HOA) have settled contract negotiations and their prescription drug co-payments have been set for the next few years. Retirees of the University union groups will in the future adopt the same co-payment as the unions they came from.


    Membership of the Prescription Drug Program Oversight Committee

  • John E. Billi (chair), associate dean for clinical affairs at the Medical School and associate vice president for medical affairs

  • James Stevenson, director of pharmacy at Pharmacy Services, and associate dean for clinical sciences, College of Pharmacy

  • SeonAe Yeo, associate professor of nursing, SACUA Representative

  • Patrick L. McKercher, director of the Center for Medication Use, Policy and Economics, College of Pharmacy

  • Dean G. Smith, professor of health management and policy, School of Public Health

  • Margaret Punch, clinical associate professor of obstetrics and gynecology, Medical School

  • Gloria Hage, assistant general counsel, Office of the General Counsel

  • Louis Green, administrative manager, Purchasing Department

  • Martin Norton, professor emeritus of anesthesiology, Department of Otorhinolaryngology, Medical School and University retiree

  • Deborah Stoll, chairperson, U-M Professional Nursing Counsel (UMPNC), Nursing Administration

  • Marty Eichstadt, director, Benefits Office

  • Keith Bruhnsen, assistant director, Benefits Office