Reframing the pharmaceutical manufacturer/health plan relationship in managed care

Managed care is stuck in a vendor stage of health care industry evolution that is organized, primarily, to beat back costs through contracted discounts and utilization management. At the same time, the potential exists for an altogether different managed care that is based on a more explicit mission of lowering costs through improved quality. The foundation for this alternative approach is evident in current practices involving disease management and clinical-quality improvement. Significantly, while health plans do not have the staff or capital to systematically adopt these practices, pharmaceutical companies are in a unique position to assist. To the degree health plans start building sophisticated, long-term strategic partnerships with pharmaceutical manufacturers into their business models, managed care will gain the capacity to advance beyond its vendor stage and make good on its original mission of promoting preventive health, improving individual outcomes, and realizing sustainable cost containment. For this to happen, it is suggested that health plans address "total cost-of-care savings" in their budget process, and the pharmaceutical manufacturers establish a "consultative service function" in their managed care divisions.