Three PBMs Launch New Online System
Three of the nation's largest pharmacy benefit management companies have teamed up to create an electronic prescription system aimed at reducing the number of medication errors, Reuters/Philadelphia Inquirer reports. AdvancePCS, Express Scripts Inc. and Merck & Co.'s Merck-Medco division will join to form RxHub LLC, which will electronically link pharmacies, physicians, drug-benefit managers and health plans (Borden, Reuters/Philadelphia Inquirer, 2/23). RxHub will act as a "conduit" that provides doctors with information about patients' drug coverage and any other medications they are taking. The system will "immediately" alert doctors of any possible harmful drug interactions, thus reducing a large number of potentially fatal medication errors (Carrns, Wall Street Journal, 2/23). The system also aims to save physicians, pharmacists and patients time and money by instantly giving physicians information on patients' drug coverage. After a physician sends a prescription through the system, it is checked against a database listing the patient's drug benefit plan. The physician is then "instantly" alerted if the drug is not covered under the patient's plan (Banstetter, Ft. Worth Star-Telegram, 2/22). The New York Times reports that informing physicians immediately about patients' drug coverage should cut the number of phone calls between pharmacists and doctors by 100 million (Freudenheim, New York Times, 2/23).
Patients also would spend less time waiting at the pharmacy if pharmacists did not need to check on patients' drug coverage or history with physicians and insurance companies (Appleby, USA Today, 2/23). In addition, electronic prescriptions would eliminate "confusion" caused by prescriptions written in "illegible handwriting," another leading cause of medication errors (New York Times, 2/23). While some individual health plans already have electronic prescription services, there is currently no "standard" system linking all physicians, pharmacies and health plans (Ft. Worth Star-Telegram, 2/22). AdvancePCS, Express Scripts and Merck have invested $60 million in RxHub, but maintain that the venture "is not intended to be a profit-making entity." RxHub is instead expected to "return the cost of capital" to the three companies (Reuters/Philadelphia Inquirer, 2/23). RxHub would be open to all pharmacies, health plans and other benefit managers, and would be financed primarily by fees charged to pharmacies, technology companies and benefit managers using the system. Doctors, however, would not be subject to "direct charges" for using RxHub. The three companies plan to start operations for RxHub early next year.
RxHub may face difficulty shifting doctors into electronic prescription-writing, the New York Times reports. Fewer than 5% of the country's 750,000 doctors currently send prescriptions electronically, according to Merck-Medco President Richard Clark (New York Times, 2/23). David Halbert, chair and CEO of AdvancePCS, said that the "industry clout" of the three companies will likely lead more physicians to prescribe electronically. "Teaming up like this will make it a lot easier for us to get everyone on the same page," he said (Ft. Worth Star-Telegram, 2/22). Dr. Russell Ricci, general manager of IBM Global Healthcare, agreed. "The coming together of these managed care companies will rapidly increase the deployment of hand-held devices in doctors' offices," he said. Industry "experts" predict that the system will be a "boon" to technology companies developing hand-held devices for writing e-prescriptions (New York Times, 2/23). To ensure that all the systems have standardized access to multiple PBM databases, health plans and drugstores, RxHub will work with "standard-setting" groups such as the National Council for Prescription Drug Programs to develop universal electronic prescribing standards.
Each of the three companies says that RxHub is first and foremost about increasing patient safety through reduced medication errors. Barrett Toan, CEO of Express Scripts, said, "It's not about reducing costs. The beauty of this system is that it will also improve the quality of patient care" (Wall Street Journal, 2/23). Halbert cited an Institute of Medicine study that found that prescription errors are responsible for the deaths of 7,000 Americans each year (Ft. Worth Star-Telegram, 2/22). The companies also cited a separate study showing that misinterpreted physician prescriptions are the second-most prevalent and expensive claim listed on 90,000 malpractice suits over a seven-year period (Reuters/Philadelphia Inquirer, 2/23). While electronic prescription systems could help reduce the number of prescription errors, privacy advocates are concerned that the technology could allow patient information to be made public. Other critics of RxHub state that the three founding companies might try to "highlight their own mail-order pharmacies and cut into profits of retail drug stores." The founders of RxHub responded that they will leave patients free to choose between their pharmacies and mail-order businesses, and have promised not to sell personal data (USA Today, 2/23). All data sent by RxHub will be encrypted to comply with federal privacy regulations, Halbert said (New York Times, 2/23). RxHub faces some obstacles in getting started, USA Today reports, such as physicians' reluctance to use online prescriptions and competition from other companies already working on similar databases (USA Today, 2/23). In addition, 10 states prohibit electronic prescriptions, and three require a paper copy for each electronic prescription. RxHub founders, however, say that they are "confident" that those restrictions will "eventually be relaxed" (New York Times, 2/23).