Thursday, April 24, 2014

Reference Pricing: Pharmacy Invoice Cost (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.

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.

Wednesday, April 23, 2014

Early Pharmacy Claims Data from Exchange Enrollees Indicate High Usage

When setting rates for qualified health plans sold through public exchanges a year ago, actuaries anticipated that people who purchased coverage through an exchange would be older and less healthy than the commercially insured population. They also assumed there would be pent-up demand for pharmaceuticals and care. 

Now that exchanges are up and running, preliminary drug claims data is showing such a trend. The April 17 issue of Atlantic Information Services, Inc.'s Inside Health Insurance Exchanges (HEX) walks readers through data from two pharmacy benefit managers (PBMs) and what it means for insurers.

During the first two months of 2014, exchange enrollees were more likely to use costly specialty drugs when compared to those with coverage outside of the exchanges, according to preliminary claims data released April 9 by Express Scripts. 

According to the early data, six of the 10 costliest medications used by exchange enrollees were specialty drugs versus four of the top 10 used by commercial health plan enrollees. Of total prescriptions filled for exchange plans, 1.1% was for specialty drugs, compared with 0.75% in commercial plans -- a near-50% difference.

Read more: http://www.digitaljournal.com/pr/1867253#ixzz2zipbRF40

Sunday, April 13, 2014

Experts warn employers to prepare for high costs of specialty drugs

As if employers didn’t have enough headaches in managing their employees’ health benefits, now they face an emerging trend that carries an enormous price tag: the growing number of specialty drugs to treat complex medical conditions.
While the new generation of genetic-based specialty drugs, known as biologics, bring major breakthroughs in treating people, their costs are daunting.
Just one in 100 members of Blue Cross Blue Shield of Michigan use a specialty drug, but the class of pharmaceuticals now accounts for 30 percent of what the insurer pays out in pharmacy claims for all drugs, said Hiral Patel, a clinical pharmacist at BCBS.


“It seems like every single drug that is coming out to treat a rare condition has a hefty price tag,” Patel said during the recent health benefits seminar held by Advantage Benefits Group in Grand Rapids.
Specialty drugs taken orally, by infusion or injected to treat complex conditions such as cancer, multiple sclerosis, rheumatoid arthritis, hepatitis, inflammation, Crohn’s disease or infertility collectively carry an average cost of $2,475 per month per medication. That compares to an average cost of $280 for a brand-name drug and $32 a month for a generic drug, according to Blue Cross Blue Shield of Michigan data.
Patel cited one drug for cystic fibrosis that costs $365,000 a year.
See more at: http://mibiz.com/item/21456-experts-warn-employers-to-prepare-for-high-costs-of-specialty-drugs#sthash.htZNs7Lj.dpuf

Monday, April 7, 2014

Reference Pricing: Pharmacy Invoice Cost (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.

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, April 4, 2014

Lawmakers seek more pricing info from PBMs

Legislation is pending in 14 states that would require more pricing disclosures from pharmacy benefit managers, such as Express Scripts.

Pharmacy benefit managers, or PBMs, negotiate deals with drugmakers that set maximum amounts they will reimburse drugstores for generic drugs and what they will then charge their clients for the drugs. The difference between these two numbers is labeled as "spread pricing" and can be very profitable for PBMs, USA Today reports.

Brian Henry, Express Scripts spokesman, told USA Today that Express Scripts' clients can decide whether or not to include spread pricing in their contracts and that the pricing mechanism earns the PBM money when its clients save money.



A recent report by consulting firm Visante found that PBMs will save Medicare, companies and consumers nearly $2 trillion on prescription drugs between 2012 and 2021. Visante was hired by the Pharmaceutical Care Management Association to complete the study.

However, consumer advocates are questioning how much value PBMs are actually adding to the process. PBMs "essentially are middlemen who also add costs to the system," Wendell Potter, a consumer advocate and former spokesman for Cigna insurance, told USA Today.

A Department of Health and Human Services rule that went into effect last year requires PBMs to report to the government the rebates and discounts they get from drugmakers when they are processing Medicare benefits, but that information does not have to be shared with the public.

Read more at USA Today.