Employee Benefits

Remedy Analytics attempts to level the playing field for drug prices

The startup’s CEO believes tha prescription drug pricing is needlessly complex and real-time data analytics that his company has developed for pharmacy benefits managers to lower employers’ drug spending is going to shift the dynamics in the industry.

The recent HLTH conference illustrated the many ways companies can address healthcare’s more intractable challenges. One example is Milwaukee-based Remedy Analytics, which analyzes the data produced by pharmacy benefit managers (PBMs) to help organizations lower their pharmaceutical spending.

“People don’t realize that, when you get a prescription filled, there’s up to 600 data fields that get generated,” said Remedy chairman and CEO Scott Martin in an interview. “That information is captured by the PBM and the health plan…Remedy collects that data, breaks it down, analyzes it, makes it actionable and feeds it back to the employer to make smart decisions to reduce costs and help results.”

Those 600 fields include the patient’s name, their diagnosis, prescribing doctor, the prescription’s average wholesale price when it was filled, the employer, information about the health plan and many other details.

“It’s unbelievably voluminous, and most employers don’t even realize that data is actually generated,” said Martin. “Even if they could get their hands on it, it’s so voluminous, what the heck would they do with it?”

That was the question that launched Remedy.

Martin and colleagues wanted to find ways to extract meaningful information from the data and use it to reduce pharmacy costs. The company works with organizations that have self-funded health plans, such as health systems, unions, municipalities or insurance companies. According to Martin, some of Remedy’s clients can spend as much as $2 million a day on prescription drugs, but don’t entirely understand how that money is being spent.

“People think they’re buying the drug from the pharmacy – they’re not,” said Martin. “Your PBM intercepts at the moment of transaction, instantly buys the drug from the pharmacy and sells it to your employer and yourself in that split second.”

The key to navigating this labyrinth – at least that’s what Martin presumably believes —  is PharmaLogic, Remedy’s analysis tool. It produces insights from those 600 data fields to help companies better understand drug costs and other issues. Martin believes drug pricing is purposefully opaque to conceal the markup. By translating the data into useful information, Remedy tries to shine a light on what the drugs should actually cost. Quite often, when presenting to clients, the results generate some shocked faces.

“We actually do it live in our PharmaLogic system, because now we have all the data in the system, and we can show them in real time, here’s what’s actually happening with your program from a structure standpoint, meaning the contract and the financials,” said Martin. “Then you show them what the cost of that is, and that’s where the smoke starts coming out of their ears.”

From there, companies have a stronger position to query their PBMs and renegotiate contracts. Martin notes these contracts can run 180 pages and are exceptionally complex. Corporate attorneys read through them, but these reviews can be narrowly focused.

“All the attorneys the clients had review the contract just looked at it from a legal standpoint, not strategy,” said Martin. “They don’t have the insight into the industry to know what to look for.”

Martin believes the same can be true for large consulting firms, such as Towers or Mercer, that may understand the industry but lack the analytic data to meaningfully negotiate with PBMs. He finds that having the evidence makes all the difference during these discussions.

“What’s exciting is that, 99% of the time, we get the changes made, because they don’t want to lose the client,” said Martin.

The data has other potential applications, such as providing new tools to support patient compliance. Martin believes untangling these innate complexities can help companies save a lot and hopefully create a more transparent system.

“The biggest thing about the industry,” said Martin, “is that it’s broken by design, not necessity. This whole prescription drug system doesn’t need to be complex.”