Five Blue Cross Blue Shield Plans are joining forces to help launch a new venture with a lofty but familiar goal: to reduce the cost of prescription drugs.
The plans have invested in a new independent company, Evio, which will harness a trove of data to assess how well a drug works, and will ultimately try to align a drug's cost with how well it performs.
The move is in step with the larger industry trends of moving toward a system that pays for the value of care instead of the volume of services provided. But some are skeptical this latest venture will disrupt the status quo.
The plans — Blue Cross Blue Shield of Massachusetts, Blue Cross Blue Shield of Michigan, Blue Shield of California, Highmark Inc., and Independence Blue Cross — are viewed as some of the more innovative BCBS plans in the U.S.
Evio will have considerable scale at first as it will lean on data from the more than 20 million people the five BCBS plans cover across multiple states. Access to this significant pool of patients may give Denver-based Evio both leverage in potential contracts based on value and greater insight into how medicines work (or don't) for millions of patients. From there, the company will develop insights for the original plans to address affordability and outcomes.
The sheer scale will support "a lot more analysis of effectiveness of different drugs, both through scale economies in doing the analysis and through larger data bases on experience with specific drugs to draw on," Paul Ginsburg, director of USC-Brookings Schaeffer Initiative for Health Policy, said. Ginsburg is also the vice chair of the Medicare Payment Advisory Commission, an influential group that advises Congress on the Medicare program.
However, the five health plans are not obligated to use any solutions Evio will ultimately create from its findings, Evio CEO Hank Schlissberg said.
That's "unbelievable" to Elizabeth Mitchell, CEO of the Purchaser Business Group on Health, which represents major employers like Microsoft and Boeing that collectively spend $100 billion annually on healthcare.
Each of the five BCBS disclosed it contributed "significant" funds to get Evio off the ground, and their customers are right to expect that the investment turns into value for them, Mitchell told Healthcare Dive.
If a potential Evio solution threatens to undo the status quo, it's unlikely to be implemented, Mitchell fears.
"So, when it comes down choosing between disrupting a profitable vendor relationship, or creating affordability for customers, where did they come down? Because in our experience, it is rarely with the customers," Mitchell said.
The new venture comes with a familiar promise in healthcare: lower prices.
Many efforts have promised similar results, though some of the headline-grabbing ventures, perhaps most spectacularly a bid by Amazon, J.P. Morgan Chase and Berkshire Hathaway, have since gone bust.
The cost of healthcare is a hotly debated topic and seemingly perennial issue in American politics. Recent CMS data showed U.S. health care spending up 4.6% in 2019, reaching $3.8 trillion and approaching 18% of GDP. Of that, spending on prescription drugs also sped up by 5.7% to nearly $370 billion.
The problem is only set to get worse. New drugs with big promises, and price tags to match, continue to win FDA approval. Just this month the FDA cleared a new Alzheimer's treatment with an estimated average price tag of $56,000 a year.
"We've got to figure out better ways to manage costs, and just make it simpler for everyone," Schlissberg, a former executive with DaVita, said.
"The more that we can aggregate data, the better look that we can get at how the drug is actually performing in the real world," Schlissberg said. That is especially important for drugs that target smaller patient populations.
Over the years, industry players, including insurers, have come under increasing scrutiny for their role in the cost of care.
When asked why five insurers had to launch a separate company to address the issue of drug costs, Schlissberg said, it's a way to use best practices and, "I think there's an opportunity to use scale in a fundamentally different way than it's been done before."