Value-based contracts can lower costs for payers, offer pharmaceutical companies valuable feedback about their therapies, and, ultimately, improve the quality of health care.
Properly managing a Medicaid program requires sensitivity to this population's unique needs, a keen understanding of the regulatory requirements, a degree of creativity, and persistence. People on Medicaid tend to have a higher incidence of chronic diseases and, as such, require more maintenance medications, yet they face significant barriers to adherence.
In Puerto Rico, the landscape is especially challenging. The percentage of people eligible for Medicaid is significantly higher than the national average. In 2019, while 21% of the nation's population were covered by Medicaid/CHIP, 40% of Puerto Ricans were eligible for the program.
The incidence of hypertension, diabetes, and cardiovascular disease are all significantly higher than in the mainland. On average, the cost of living is also higher, particularly for essentials, such as food and utilities, and the population is aging.
This is compounded by significant constraints in federal funding. For the fiscal year 2020, projected spending per full-year equivalent enrollee was 38% lower than the state with the lowest spending, even after adjusting for differences in enrollment mix and covered benefits.
To address these challenges, we formed a collaborative partnership with Abarca. While some state Medicaid programs have had high-profile challenges with the way their pharmacy benefits have been managed, our relationship is based on total transparency and a shared, unrelenting focus on finding ways to meet our beneficiaries' needs.
COLLABORATION YIELDS INNOVATION
Early in our partnership, we implemented an integrated solution that combined improvements to formulary and utilization management programs, advanced analytics, and new revenue opportunities to address pressing financial needs. As a result, rebates have grown an average of 25% annually, and net drug costs have remained under $30 per member per month (PMPM), which is less than half of the national average and one-third of the PMPM cost of some states.
Our partnership has continued to deepen over the past decade, allowing us to problem-solve and innovate together. For example, we have implemented a new approach to expand treatment access for beneficiaries with hepatitis C, to reduce mortality and stop the spread of this disease.
In the face of rising prescription costs, we have taken bold approaches to drug contracting to make spend more efficient and ensure that our members were on treatment regimens that were effective for them. This included implementing the first value-based contract to apply to Medicaid populations with Biogen, one of the nation's leading drugmakers.
Under the terms of this agreement, Biogen would provide full reimbursement for ASES members who discontinued the use of 2 of their leading multiple sclerosis (MS) therapies, Avonex (interferon beta-1a) and Tecfidera (dimethyl fumarate), within the first 6 months of treatment. These specialty medications come with a high price tag and although they are only taken by a small number of members, in the first 2 years of the program, we have been able to recoup costs and provide critical feedback about the treatment.
Currently, this type of contracting is uncommon among commercial plans, let alone Medicaid programs. But value-based contracts can lower costs for payers, offer pharmaceutical companies valuable feedback about their therapies, and, ultimately, improve the quality of health care. These contracts require a higher level of patient monitoring and reporting, and we would not have been able to deliver without Abarca's technological capabilities.
THE PATH FORWARD
As we continue to grapple with the impact of coronavirus disease 2019 on health care, on people with lower incomes, and on the economy, the role of Medicaid programs has never been more important. Medicaid enrollment has been rising throughout 2020 across the country, including in Puerto Rico.
Though it can take years to see the ROI of any given initiative, the collaboration between Abarca and ASES is already yielding returns.
These days, it is hard to feel sure about anything. But we know that our partnership has given us an incomparable arsenal with which we can respond to whatever comes next. In the meantime, we'll keep working together to provide the best possible health care experience for our beneficiaries.