PBMs in Workers’ Comp
After walking the exhibit halls at the RIMS Conference in Philly for two days, it has become apparent that pharmacy management is the new hot business. Here are a few of the indicators…
there were at least a half-dozen new PBMs in the hall, some of which had apparently only just figured out how to spell " workers compensation", and others that had progressed only marginally beyond that level
some of the supposed "old hands" had erroneous information, including one "head of the WC division of a regional PBM" that informed, with great authority, that the WC fee schedule in California had just been changed back to the old fee schedule; AWP plus 10% for brand and AWP plus 40% for generics. Much as I tried to diplomatically correct this misinterpretation, this executive could not be swayed. This PBM does provide services to "several hundred WC payers". Woe to them indeed.
One of the more significant companies in this business has just been acquired by a private equity firm for a price that is rumored to be quite rich. There were other suitors as well; two of them contacted HSA as part of their due diligence process.
Why the interest?
1. Group health PBM margins are thin and getting thinner. In contrast, WC margins are fat fat fat.
2. WC pharmacy is now about $3.5 billion annually, and growing at a rather healthy (or unhealthy, depending on how you look at it) 12% clip.
3. This is just a guess, but I'd have to assume some of the herd mentality is at work here as well.
What does this mean for you?
Be wary of "new" PBMs in WC, whether you are an investment banker, WC payer, or employer. Some of the self-appointed experts I spoke with were clueless.