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.

Average Wholesale Price (AWP) for Twelve of the Most Expensive Specialty Drugs

A Fiduciary 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 specialty 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

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.

Industry Consolidation Is Impacting PBM Customer Service

Drug Benefit News interviewed several pharmacy benefit consultants about what employers are seeking in a pharmacy benefit manager, and found that although shopping around for a new PBM is a hassle, some employers are considering it because they’re unhappy with the customer service at their current PBM.
“I think [PBM industry] consolidation has impacted the quality of service on clients,” asserts Helen Sherman, Pharm.D., vice president at Solid Benefit Guidance. Some of these “service pains” created by recent mergers and acquisitions pertain to resolution on coding and other operational issues, she tells DBN.

“Our large employer clients have been particularly interested in exploring the marketplace this year,” reports Josh Golden, a consultant at Pharmaceutical Strategies Group LLC. “This is driven by two primary factors: First, inconsistent service levels across the major PBMs have left a number of clients frustrated with their incumbent.

Second, our clients are learning that the competitive bid process almost always drives a better financial outcome compared to a non-competitive renewal. They’re willing to invest time and resources to pursue that additional value.”
Visit http://aishealth.com/archive/ndbn052314-05 to read the article in its entirety, including what consultants have to say about carve-in deals.

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.

The Insurance Industry is Picking a Fight with Pharmaceutical Companies Over the Rising Cost of Specialty Drugs

The insurance industry is picking a fight with pharmaceutical companies over the rising cost of specialty drugs.
Insurers say the high prices are raising healthcare costs for insurance companies and everyone else, threatening the sustainability of the U.S. healthcare system.

Drug makers say the high prices are necessary to recoup research and development costs. They also say insurers should cover more of the cost of pharmaceuticals.

The fight has been waged as a full-fledged feud in Washington between America’s Health Insurance Plans (AHIP), the lobbying group for insurers; and the Pharmaceutical Researchers and Manufacturers of America (PhRMA).
In the last week, AHIP CEO Karen Ignagni has launched a full-on public relations assault against drugmakers, who AHIP says threaten to threaten to bankrupt families and bust government healthcare budgets.
“Is this ‘whatever you can get away with’ pricing here?” Ignagni asked during a healthcare conference hosted by the New York Time on Thursday. “Is that the right thing for the future?”
Ignani questions whether U.S. consumers are subsidizing lower drug prices in other countries. And during another recent healthcare conference hosted by The Atlantic, Ignagni warned if stakeholders do not fix the rising cost of drugs, the government may end up legislating drug costs.
The catalyst for this fight is Gilead’s $1,000-per-pill Sovaldi, which is used to treat Hepatitis C. A patient required to take one pill a day for 24 weeks would have to pay $168,000.
AHIP has lambasted the drug’s cost. And while Gilead is not a member of PhRMA, the lobby group has come to its defense.
“It is penny wise and pound foolish to focus solely on the price of a new medicine while completely ignoring the value it provides to patients and the health care system broadly,” said John Castellani, PhRMA CEO.
“Curing Hepatitis C not only dramatically improves patients’ lives, but has the potential to save the U.S. health care system as much as $9 billion per year by preventing expensive hospitalizations and avoiding thousands of liver transplants that routinely cost over $500,000 each.”

Read more: http://thehill.com/policy/healthcare/207803-rising-drug-prices-trigger-civil-war-between-healthcare-lobbies#ixzz33U8PDHew