PBMs make their way into electronic prescriptions

Pharmacy benefit management companies hook themselves up with doctors' offices to encourage more physicians to adopt online prescribing systems.

By Tyler Chin, amednews staff. March 26, 2001.

Three of the largest pharmacy benefit managers in the country are planning to develop an online exchange that will electronically connect physician offices to the PBMs and pharmacies.

The online exchange, RxHub LLC, will allow doctors to transmit electronic prescriptions to pharmacies while patients are still in their office, said the PBMs, which administer the prescription benefit on behalf of employers and health plans.

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When doctors use the exchange, PBMs and pharmacies will let them know immediately whether prescriptions are covered by patients' health plans. Physicians also will be alerted about potential adverse drug events and will be asked if insurers' preferred medications can be substituted for what was originally prescribed.

The three PBMs -- AdvancePCS, Irving, Texas; Express Scripts Inc., St. Louis; and Merck-Medco Managed Care LLC, Franklin Lakes, N.J. -- said the exchange would improve patient safety and save time for physicians and patients.

For example, pharmacies, physicians and patients will benefit because RxHub would spare them from either making or receiving phone calls and additional paperwork because prescription-related problems would be caught at the front end rather than when the patient is at the pharmacy.

The PBMs estimated that about 5% of the country's physicians are prescribing electronically and that doctors receive 100 million calls annually from pharmacists about illegible prescriptions, potential medication errors and substitutions.

"This system will allow us to go one step further in the doctor's office, yielding substantial savings for all involved," said David D. Halbert, CEO of AdvancePCS.

Among the beneficiaries will be the three PBMs, which believe that RxHub will help their own businesses. "The increased cost of prescription medications is causing health care costs to rise and our clients are looking to us to help them" lower costs, said Barrett A. Toan, CEO of Express Scripts.

Big investment

Each company had been working separately on its own physician connectivity initiatives, "but decided that founding this joint venture is the best and most efficient way to accelerate development of an industrywide solution," Toan said.

Collectively, the three PBMs will invest $60 million over five years to create RxHub.

Th exchange will have its own management team. That team will be responsible for developing a business model for RxHub, but its founders said they expect that the exchange will charge transaction fees to pharmacies, health plans and PBMs using its services.

RxHub will not charge doctors, but companies that sell electronic prescription and practice management systems may charge them fees to connect them to the exchange, Halbert said. RxHub, which will be open to other PBMs and health plans, will be launched at the end of 2001 or in early 2002.

One of the major challenges facing the venture is the lack of electronic prescribing standards, Toan said. The founders of RxHub said they would work with the National Council for Prescription Drug Programs and other standard-setting organizations to address the problem.

Another challenge is that some states don't allow electronic prescriptions. But the companies think those states will move in that direction, Halbert said.

The three PBMs manage prescription benefits for 125 million people and process almost half of the 2.5 billion prescriptions filled annually.