Monday, January 27, 2014

Reference Pricing: Pharmacy Invoice 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 costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC.  The bottom line; payers must have access to "reference pricing." Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.


As of 1/23/2014 - 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 5% 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.

-- Tip --

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine 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.

Friday, January 24, 2014

The Pharmacy Benefits Manager RFP; 7 Contract Tips for a Cost Efficient Drug Benefit Design


  1. Skip the RFP as it is largely a waste of time and money. Instead draft an airtight FIDUCIARY contract and put it out for bid
  2. Acquire "reference pricing" AND relentlessly measure cost performance 
  3. Write meaningful financial and performance guarantees 
  4. Mandate full transparency and complete audit rights 
  5. Create market check and carve-out rights that currently don't exist in almost all PBM contracts 
  6. Shorten contracts (to 2 years) and include favorable contract termination rights 
  7. Eliminate rebate and/or savings program loopholes

Thursday, January 16, 2014

Pharmacy Cost [invoice] for Top Selling Brand and Generic 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 costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC.  The bottom line; payers must have access to "reference pricing." Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

As of 01/16/2014 - 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 5% 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.

-- Tip --

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine 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, January 14, 2014

PBMs and generic drugs: Is the good news ending?

The growth of generic drugs has been a good news story for payers and pharmaceutical benefit managers (PBMs), but that story may be coming to an end.
Generic Drugs and the Global Market
Many major brand name drugs are at the end of their patent-protected life cycles and now face generic competition. Two years ago, Lipitor and Plavix alone were at $15 billion combined revenue but are nearing the end of their revenue blitz with a projected drop to as low as $1 billion.

While generic alternatives to Lipitor and Plavix will take billions in drug costs out of the healthcare system in the next 3 to 4 years, other major drugs reaching the end of patent protection will reduce spend in a similar way. But this anticipated decline in spending is masking the growth of specialty drug costs. For many healthcare payers, the drug portion is the most slowly increasing area of their spending, but in the next couple of years the tide will turn, as specialty drugs becomes the focus.
For payers and PBMs this will be more good news, as they can offer services to control costs and utilization, but it also harbors bad news for PBMs. It is not unlikely that in the very near future, nine out of 10 drugs dispensed will be generic. With generic utilization at more than 90 percent, the need to manage this area of drugs spend will not be of great concern. As a result, the current PBM business model has 3 to 4 years of life before it goes over the cliff.
With the need for business model change on the horizon, the ongoing deal making within the PBM industry is not surprising. Witness the recent deal between Catamaran and Cigna, along with the massive acquisition of Medco by Express Scripts. We will continue to see strategic distribution planning as PBMs brace for the end of the generic wave, a new era of specialty pharmacy and a re-positioning imperative to their expansion and acquisition goals.  To continue reading, click here for the full article...
by Ryan Liabenow, President & CEO of The Kavanah Group

Friday, January 10, 2014

Pharmacy Invoice Prices (Actual) 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 costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC.  The bottom line; payers must have access to "reference pricing." Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.
As of 01/09/2014 - 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 5% 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.

-- Tip --

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine 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.

Thursday, January 9, 2014

Mail order drug systems more cost effective than brick-n-mortar pharmacies

The debate rages over which option provides the better experience: pharmacy filled-and-delivered prescription drugs, or mail-order systems. Generally, research has shown that more patients prefer to get their drugs through a retail pharmacy than by mail.
However, when it comes to who’s saving who more money, two new studies suggest that mail order wins that one hands down.
The thumbs up for mail order come from two analyses: One by Centers for Medicare & Medicaid Services, another by Kaiser Permanente and the Centers for Disease Control and Prevention.
The former analysis compares mail-service pharmacies and retail pharmacies in Medicare Part D claims, while the latter looks specifically at the experiences of patients with diabetes. The Medicare Part D “finds that mail-service pharmacies have lower overall costs,” reported the Pharmaceutical Care Management Association.

“CMS’ data confirms what consumers have known for years: mail-service pharmacies offer a better deal than drugstores in Medicare Part D. This is unwelcome news for drugstore lobbyists who want new regulations on their more affordable competitors,” said PCMA President and CEO Mark Merritt.
When CMS looked at generic drugs only, the cost advantage via mail order was 13 percent compared to pharmacy prices.  Click here for the full story...
December 4, 2013