Comprehensive Care (CHCR – $0.19) has signed a very important agreement with WellDyneRx, a prominent Pharmacy Benefit Management (PBM) which will assist in the implementation of CompCare’s newly designed Pharmacy Savings Center Program.
CompCare currently manages, on an “at-risk” basis, the prescription drug benefit of a number of its clients’ health plans. Under its existing program, CompCare receives a fixed fee, per member per month, in exchange for CompCare assuming the financial risk of paying for the client’s members’ prescription drugs as well as performing ancillary pharmacy management services.
Because CompCare’s management team realized that soaring drug costs and an aging population have added enormous costs to the healthcare system, they sought, and found, a way to materially reduce those expenses.
How it Works
The traditional Pharmacy Benefit Manager business model is based on the spread between what the PBM reimburses the pharmaceutical supplier and what the PBM charges the health plan customer. Currently, this spread approximates $8 to $20 per script.
CompCare’s new Pharmacy Savings Center Program works exclusively with transparent pass through PBMs. In this model, the PBM only charges the health plan partner the exact same amount that was paid to the pharmacy. A low administrative fee is added to the charge and is the only margin for the PBM. This “administrative fee” is in the range of $1 to $3 per script — significantly less than the margin in the spread model.
Based on the model negotiated by CompCare with the PBM, CompCare constructed a case model using one of its clients for which CompCare currently manages the psychotropic drug spend. This client spends $300 million on non-psychotropic drugs and $30 million on psychotropic drugs annually. After analyzing the drug spend over a random ninety-day period, CompCare determined that it could offer the client a 10% reduction or, put another way, a $33 million annual savings thanks to its new Pharmacy Savings Center Program. Significantly, CompCare is also positioned to guarantee the savings to its client.
WellDyne, Inc. has been in the health services business for over 17 years and provides Pharmacy Benefit Management, Mail Order Pharmacy and Specialty Drug Fulfillment services. Additionally, WellDyneRx, a division of WellDyne, serves its health plan members through a retail network of more than 60,000 pharmacies across the United States, including well known chains like CVS, Walgreens, Walmart and Target.
CompCare’s model to not only materially reduce its client’s pharmacy spend but to also guarantee those savings is unique in the healthcare industry.
We like this program and we like Comprehensive Care’s direction. CompCare is already profitable, and when it closes one contract with a major company to handle its pharmacy drug spend under this program, we would expect its profits to skyrocket.
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