Thursday, October 31, 2013

"Actual" Acquisition Costs (what pharmacy pays) of Top Selling Generic and Brand Prescription Drugs for Payers

Why is this document 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 healthcare reform. The costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC.  The bottom line; payers must have access to "reference pricing" then apply this knowledge to lower plan expenditures for stakeholders.
As of 10/31/2013 - Published Weekly on Thursdays

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.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement.  It's impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our pharmacy cost then determine if a problem exists. When there is a 10% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means that your organization or client is likely overpaying. REPEAT these steps once per month.


Include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to see if better pricing is available in the marketplace compared to what the client is currently receiving. 

When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization.  In this case, the market check language is effectually meaningless.
I welcome any comments you may like to post.  In addition, feel free to contact me at tyrone_squires@transparentrx.com or call (702) 430-4536.

Thursday, October 24, 2013

"Actual" Acquisition Costs (what pharmacy pays) of Top Selling Generic and Brand Prescription Drugs for Payers

Why is this document 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 healthcare reform. The costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC.  The bottom line; payers must have access to "reference pricing" then apply this knowledge to lower plan expenditures for stakeholders.
As of 10/24/2013 - Published Weekly on Thursdays
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.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement.  It's impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our pharmacy cost then determine if a problem exists. When there is a 10% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means that your organization or client is likely overpaying. REPEAT these steps once per month.

Include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to see if better pricing is available in the marketplace compared to what the client is currently receiving. 

When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization.  In this case, the market check language is effectually meaningless.

Tuesday, October 22, 2013

The High Price of Specialty Drugs: Whining Won't Solve the Problem!


Today’s Managing Health Care Costs Number is $311,000


Source   (BOB= Book of Business)

An editorial in today’s JAMA decries the price of the orphan drug Ivacaftor (Kalydeco), a product of Vertex Pharmaceuticals for cystic fibrosis patients who carry a specific mutation.   The price is $311,000 – although some patients could pay as much as $373,000. The drug would be taken for decades.

The drug was developed after researchers funded by the National Institutes of Health, identified the genetic defect. The Cystic Fibrosis Foundation gave Vertex and its predecessor company $75 million in research funding, and allowed it access to its therapeutics development network to speed the trials that gained it FDA approval.

The authors say “pharmaceutical companies have an implicit obligation to put patient well-being and resource utilization on an equal footing with return on investment” and “the pharmaceutical industry and its financial backers should seek to consider both financial return and social good, embracing the tenet of social justice.   They also call for transparency in pricing.  To continue reading click here...

About the Author
Jeff Levin-Scherz is an Assistant Professor at Harvard Medical School and Harvard School of Public Health. He is the Chief Medical Officer at One Medical, an innovative and growing primary care practice currently in San Francisco, New York and Washington DC. 

Thursday, October 17, 2013

"Actual" Acquisition Costs (what pharmacy pays) of Top Selling Generic and Brand Prescription Drugs for Payers

Why is this document 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 healthcare reform. The costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC.  The bottom line; payers must have access to "reference pricing" then apply this knowledge to lower plan expenditures for stakeholders.
As of 10/17/2013 - Published Weekly on Thursdays

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.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement.  It's impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our pharmacy cost then determine if a problem exists. When there is a 10% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means that your organization or client is likely overpaying. REPEAT these steps once per month.

Include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to see if better pricing is available in the marketplace compared to what the client is currently receiving. 

When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization.  In this case, the market check language is effectually meaningless.

Tuesday, October 15, 2013

7 Steps for Effectively Managing Costs of Specialty Drugs

Payers continue to be challenged by rapidly rising prescription drug costs, particularly specialty drugs.  However, traditional [and some transparent] Pharmacy Benefit Managers offer the same elixir for controlling these costs as they did a decade ago: increase patient use of mail-order, use of preferred or narrow pharmacy networks, a formulary design which promotes preferred drugs, reduce patient co-pays for better outcomes blah...blah...blah...

While the aforementioned tactics do assist in controlling costs, they're standard practice and are not the aggressive measures necessary to help reduce or control spending.  An excellent PBM is one which truly puts its clients and their members first; before shareholders and profitability.  Hire the right PBM, one willing to follow through on these 7 steps, and you'll surely rein in rising drug costs.
  1. Hire a PBM willing to sign on as a fiduciary; transparent speak isn't enough.
  2. Promote member use of manufacturer coupons for brand and specialty drugs. PBMs should communicate availability of all coupons to members. 
  3. Pay only Cost Plus (no spreads or mark-ups) for all prescription drugs.
  4. Include a semi-annual market check in the contract language. 
  5. Attain and exercise full auditing rights. 
  6. Require the PBM to identify and pass along all sources of attributable revenue from manufacturers.  Limiting agreements to 'rebates' leaves money on the table.
  7. Use Reference Pricing — different and much more effective (when applied) than an AWP reporting service.
*Cost Plus = [Acquisition Cost + dispensing fee + admin fee] minus Co-pay

Due in large part to specialty drugs, we are clearly entering a time of higher costs. Payers whom act now are in the best position to assure continued access to quality care for their members while effectively managing rising drug costs.

Thursday, October 10, 2013

"Actual" Acquisition Costs of Top Selling Generic and Brand Prescription Drugs for Payers

Why is this document 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 healthcare reform. The costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC.  The bottom line; payers must have access to "reference pricing" then apply this knowledge to lower plan expenditures for stakeholders.
As of 10/10/2013 - Published Weekly on Thursdays
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.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement.  It's impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our pharmacy cost then determine if a problem exists. When there is a 10% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means that your organization or client is likely overpaying. REPEAT these steps once per month.


Include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to see if better pricing is available in the marketplace compared to what the client is currently receiving. 

When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization.  In this case, the market check language is effectually meaningless.

Tuesday, October 8, 2013

Moves by Walgreens, Other Employers to Private Exchanges Create PBM Uncertainty

While health plans across the country are preparing for the Oct. 1 open-enrollment launch of publicly funded health insurance exchanges, a separate movement toward private exchanges is taking place that raises some questions about where PBMs ideally fit into these arrangements and how they will profit from them. Walgreen Co. on Sept. 18 joined a growing list of large employers that have opted to move a portion of their insured employees into private exchanges, through which insurers offer a range of health plan options that employees can select.

And while private exchanges have been gaining traction in the last couple of years, the role of pharmacy still appears to be evolving, with some PBMs pursuing carve-out options and others seeking to operate as partners to the health plan participants. A private exchange allows employers to offer more benefit design choices to employees and in some cases set a defined contribution toward coverage. If workers select a more expensive health plan, they pay the difference in premiums. Some private exchanges make available benefit designs from several different insurers. Other private exchanges are operated by a single carrier and only stock that carrier’s plans. Depending on the exchange model, the health plans may be fully insured or self-funded.
“I think we’re seeing a lot of experimentation going on, and I think the PBMs are in a bit of a standoff mode directly with the exchanges because they don’t know quite how to deal with it other than through whatever insurance company is offering that solution out to the exchanges,” observes Brian Bullock, R.Ph., founder and CEO of The Burchfield Group, Inc. “So I think we may see some changes in that landscape over the coming year or two, but my assessment is, because of the way the private exchanges are being assembled, it’s a challenge for the PBMs to figure out where they fit other than through their partner, the insurance company.” Where the PBMs are most likely to participate as traditional carve-out pharmacy benefit providers, he adds, are in situations where the exchange is offering a self-insured solution.
In the case of Walgreens, 160,000 eligible employees will be able to shop for plans offered by up to five carriers in their geographic region through its proprietary “Live Well Benefits Store,” a marketplace that is an outsourced solution through the Aon Hewitt Corporate Health Exchange. According to the press release issued by Walgreens, the new program enables the employer to continue its “value-based pharmacy benefit, which excludes prescriptions from plan deductibles.”
When asked by DBN whether Walgreens would offer a carve-out option administered by its current PBM, Catamaran Corp., Walgreens spokesperson Michael Polzin responded, “I can’t get into many specifics of our arrangement, except to say that we have been able to set up a solution through each of the insurance carriers that allows us to retain the pharmacy benefit design we have today. But I won’t be able to address questions about specific players.” An Aon Hewitt spokesperson says pharmacy benefits are generally provided as a carve-in through the participating health plans in its Corporate Health Exchange.
Catamaran became the default PBM provider for Walgreens when it purchased Catalyst Health Solutions, Inc., which had acquired the Walgreens Health Initiatives PBM business in 2011. Catamaran declined to comment for this story.
Analysts took the news to mean that Catamaran would no longer be providing pharmacy benefits for Walgreens’ covered employees as of Jan. 1, 2014. In an ISI Group LLC research note issued immediately following the Walgreens announcement, Managing Director Michael Cherny observed that while the loss is an “incremental negative” for Catamaran, it presents a minimal financial impact on the PBM. “Given the company’s increased size following the merger with Catalyst, recent business wins, the long-term Cigna agreement, and the Restat deal, the overall impact should be fairly well mitigated,” he assured investors.
Meanwhile, a BMO Capital Markets research note cited by Investor’s Business Daily pointed out that although Catamaran would lose about 2 million annual prescriptions due to the changeover, those scripts represent a small portion of its overall business and do not raise concerns about profitability.

How Much Can PBMs Make on Exchanges?  Click here to continue reading...

Reprinted from DRUG BENEFIT NEWS, biweekly news and proven cost management strategies for health plans, PBMs, pharma companies and employers.

Thursday, October 3, 2013

TransparentRx Thursday: Acquisition (Pharmacy) Cost for Top Selling Generic and Brand Prescription Drugs

Why is this document 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 healthcare reform. The bottom line; payers must have access to "reference pricing" then apply this knowledge to lower plan expenditures for stakeholders.
As of 10/03/2013 - Published Weekly on Thursdays
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.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement.  It's impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our pharmacy cost then determine if a problem exists. When there is a 10% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means that your organization or client is likely overpaying. REPEAT these steps once per month.


Include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to see if better pricing is available in the marketplace compared to what the client is currently receiving. 

When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization.  In this case, the market check language is effectually meaningless.