Thursday, August 17, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 180)

This document is updated weekly, but why is it important?  Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs and MCOs pursuant to health care reform. 

The costs shared here are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to actual acquisition costs or AAC. Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

How to Determine if Your Company [or Client] is Overpaying

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.

Tuesday, August 15, 2017

Express Scripts' profit grows despite dwindling revenue from Anthem

Express Scripts said in May that Anthem, which sued the company last year for allegedly not passing along billions of dollars in savings from negotiated drug prices, will likely not renew its contract come 2019. PBMs, which process drug claims and negotiate drug discounts with pharmaceutical companies on behalf of payers, have been criticized for operating under the veil of nondisclosure agreements and a general lack of transparency throughout the pricing process. 

"If we do enter into a new contract with Anthem, it would be on terms significantly less favorable to us than our current contract," the company said in Securities and Exchange Commission filings. 

Express Scripts' network pharmacy revenue decreased $691.2 million on the quarter, or 5%, primarily due to filling more generic prescription claims. However, home delivery and specialty revenue increased $544 million, or 5%, primarily due to ballooning prices on branded drugs and a higher proportion of specialty claims, which have been the drivers of double-digit increases in pharmaceutical spending. The company made a profit of $5.21, including interest, taxes, depreciation and amortization, for every processed claim in the second quarter, up from $5.15 last year. 

Generally, filling more generic prescriptions reduces PBM revenue, as generics are typically cheaper than branded alternatives. But since ingredient costs paid to pharmacies on generics is lower than the price charged to clients, filling more generic prescriptions bolsters gross profit, the company said in regulatory filings. 

Tyrone's comment: So Express Scripts admits to spread-taking yet most plan sponsors and their advisers believe themselves to have entered a pass-through services agreement which prevents spreads. The truth is non-fiduciary PBMs have gotten smarter about where to hide these revenues.

Analysts expect Express Scripts to benefit from increased use of generics, a shift toward mail orders and significant growth in specialty and branded drugs. 

[Source]

Friday, August 11, 2017

Lawsuit against CVS could blow up what you thought you knew about drug prices

What if paying for a drug with insurance didn't cost you less, but made the drug more expensive That's what a new lawsuit filed against CVS is alleging. The suit claims that the pharmacy agrees with pharmacy benefit managers, or PBMs to sell certain drugs at a higher price if a customer is paying with insurance.

The suit also alleges that CVS pharmacies charge customers a "co-pay" that's instead additional money CVS shares with the PBM. It works like this, according to the complaint:

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The lead plaintiff in the case is a woman named Megan Schultz, and she claims that she bought a generic medication at CVS that cost $165.68 under her insurance but would've cost only $92 had she paid in cash without using her insurance.

Here's why, according to the complaint:

The PBMs can control which pharmacies are "in network" for their clients, the insurers.
Since CVS pharmacies want those sales from in-network patients, they offer the PBMs a cut of the drugs they're selling to those insured patients. What's more, Schultz says she had to find this out on her own because no one at CVS could legally give her a heads-up. From the complaint:

Thursday, August 10, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 179)

This document is updated weekly, but why is it important?  Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs and MCOs pursuant to health care reform. 

The costs shared here are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to actual acquisition costs or AAC. Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.



How to Determine if Your Company [or Client] is Overpaying

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.