Pharmacy Benefits 101: The Importance of the Network

Capital Rx

If you’ve ever gone to the doctor or filled a prescription, you’re probably familiar with the phrase “in network.” But what is the network, and how does it work? Is there anything that makes a network special? And why is Capital Rx’s national NADAC-based commercial network, not to mention our agnostic approach to networks, so unique within pharmacy benefits?

To answer those questions, we talked with Kasi Ortiz, Vice President of Provider Relations here at Capital Rx. We also discussed how JUDI®, our proprietary enterprise health platform, enables the kind of network flexibility and customization that health plans and plan sponsors need to meet their member populations’ needs.

What is a pharmacy network?

At the highest level, a network can be understood as a group of pharmacies that support a benefit where members can get their drugs filled. The network can include specialty, mail order, or retail pharmacies.

Typically, networks are broken out by line of business, and the pricing corresponds with that. However, networks can also vary based on the pharmacy type in line of business. For example, retail pharmacies can support specialty claims, or specialty pharmacies could support the retail area. It’s dependent on what plan sponsors want from a benefit design standpoint.

How does Capital Rx’s network strategy differ from other PBMs?

Capital Rx’s network strategy prioritizes transparency and simplicity. The pricing we offer leverages the National Average Drug Acquisition Cost (NADAC) benchmark, and this provides some baked-in value for plan sponsors and certainty for pharmacies.

It can’t be stressed enough that these arrangements are truly transparent – pharmacy pricing isn’t hidden, Capital Rx doesn’t set drug prices or change prices for clients based on their size. Whether it’s a plan with 500 members or one with 50,000 members, the price is the same. That level of simplicity and transparency differentiates Capital Rx from most of the more traditional PBMs.

Additionally, Capital Rx does not own a dispensing pharmacy or other fulfillment assets. So there are no conflicting goals from a financial perspective relating to where a medication is dispensed or how a member receives it (mail vs. retail). That enables our team to customize and modify our networks as needed, using standard networks as beginning building blocks.

How do clients typically weigh cost vs. quality in regard to the network?

From Capital Rx’s perspective, both cost and quality are valued. Lower cost doesn’t inherently mean lower value. Similarly, higher cost doesn’t always mean higher value. So that’s why it’s important to find the equilibrium between the two.

Plan sponsors’ goals are most important.

If a plan has members with certain disease states or particular needs, they might require a more specialized or custom network that leverages some in-house pharmacy arrangements to provide both cost and quality, for example. Other clients may not have those needs and can leverage our standard networks to provide that balance of cost and quality.

At the end of the day, we understand it’s important to find a marriage between these two factors to help drive positive outcomes. For example, members that have a good experience at their pharmacy and are receiving high quality products are more likely to be adherent. As a result, the overall health for that member is likely to improve and costs should eventually decline.

Clients should be aware of the pharmacies that support their members and understand the balance so they can find that equilibrium. But it’s really driven by the goals they have regarding their benefit design.

From a network perspective, are there other factors we should be considering alongside flexibility?

I like to think about networks like Legos® – I have a four-year-old, and Legos are an everyday part of my life, whether I’m building objects with them or stepping on them. That’s the easiest way to think about networks and our agreements at a high level.

By that, I mean we can take a group of our agreements and build a boat with them depending on the client’s needs – or we can take those same agreements and build a house. The same blocks can be used to build and customize the network structure so they align with what the client needs.

Some PBMs want to drive business to affiliated or owned pharmacies. Capital Rx obviously doesn’t have its own dispensing assets, and so we don’t have any conflicts of interest, which separates us from the traditional PBM approach. There are no conflicting financial goals preventing us from doing everything possible to meet the client’s benefit design desires.

What makes that possible is JUDI®, our enterprise health platform. Its customizable and flexible design allows for these types of unique network structures. That enables our team to “go there” with clients, to understand what they need and to find ways to leverage our existing contracted agreements – or even to go out and contract as needed to address more unique cases.

For example, a client may initially have a younger risk pool that doesn’t have a lot of unhealthy people, but as that client or that employer group matures – the membership could enter a family type structure – that client’s needs change, as do their goals and their financial approach. So, having both technology capable of adjusting alongside the client’s needs and a team willing to go above and beyond for the client helps deliver the best experience possible and combine those two needs I mentioned earlier: cost and quality.

What are some examples of customization within JUDI?

As a cloud-based platform, JUDI enables our team to address issues quickly. One example of that is COVID antiviral pricing requirements. When all those requirements were disseminated, we had to set up JUDI to price appropriate and efficiently. We were able to accomplish that within a matter of days. Our ability to move quickly mitigated our clients’ exposure to claims paying incorrectly and limited the need to do a reversal, reprocess, and address those claims that didn’t hit the appropriate pricing.

Another one of JUDI’s capabilities deals with tags. Tags allow us to drive claims, copays, coverage, and specific drugs to certain networks and agreements. Using tags allows us to customize and hone in on specific network and pricing structures that align with our clients’ needs.

For example, maybe a client wants to address drugs that are associated with a particular disease state; they can do that with a tag. Maybe they want something that is state specific for a group of members; that can be done with a tag.

In short, JUDI’s flexibility allows us to get very specific with our network and benefit designs.

We recently revealed our unbundled pharmacy benefits solution, Never Move Again™. How do we execute that solution from a network perspective?

So, going back to my Legos™ metaphor, our ability to build and customize the network structure using the same blocks gets at the heart of our Never Move Again™ strategy – specifically, the flexibility it offers clients.

The entire idea behind Never Move Again™ is that large plan sponsors – those with 10,000+ lives – should be able to customize and control their pharmacy benefit plan as they see fit. Capital Rx is simply here to administer the plan and to provide the tools necessary for plan sponsors to deliver what their members need. Network flexibility is obviously one piece of the larger puzzle, but it’s an important piece, and it would not be possible without JUDI.

Going hand in hand with that is our agnostic network approach. Essentially, if a plan sponsor wants to work with a particular specialty partner, retail network, mail pharmacy, or rebate aggregator, we are fully capable go deliver that flexibility to them thanks to JUDI’s interoperability and our lack of conflicts of interest.

Put simply, the team at Capital Rx is here to administer your pharmacy benefit, end of story. The rest is up to you, and we will only ever ask one simple question: “How can we help you?”

From a network perspective, what aspects of JUDI have impressed you the most in terms of its evolution and flexibility?

JUDI’s flexibility amazes me, whether it be around custom in-house network setup abilities or leveraging specific pricing for particular drug categories, or the ease with which we’re able to address various states’ pricing requirements.

JUDI has also evolved so much from 2021, when we first went live, to today. And as our client base has grown more sophisticated, JUDI has also become more sophisticated alongside it, and it has supported that growth the entire way.

For me specifically, that means I’ve taken on more of a consultative capacity. Traditionally, folks within the provider relations world don’t do that. That speaks to where the company views the value our people can provide to our clients. I’m excited to embrace those changes and to get more consultative and strategic with our clients as we further understand their unique benefit needs.

Want to learn more about JUDI?

Click here to check out some of JUDI’s capabilities and what our enterprise health platform is capable of delivering to Commercial, Medicare, and Medicaid plan sponsors of all sizes.

Want to dive deeper? Click here to get in touch with our team to learn about our Never Move Again™ solution and how JUDI enables plan sponsors to leverage pharmacy benefit administration that’s aligned, unbiased, and cost-effective.

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