Friday, December 30, 2016

High-Priced Drugs: Estimates of Annual Per-Patient Expenditures for 150 Specialty Medications [Report]

Recent reports have estimated overall spending on prescription medicines in the United States to be $337 billion, in 2015. Global technology company IMS Health’s forecast of the world drug market, Global Medicines Use in 2020: Outlook and Implications, projects drug spending worldwide to reach $1.4 trillion by 2020, with U.S.-based spending totaling $560 billion - $590 billion.


Although use of lower-priced generic medications is expected to exceed 90 percent of all prescriptions dispensed in the United States over the next five years, IMS anticipates 225 new medications will be introduced to the U.S. market during this same time period. Many of these agents will be specialty pharmaceuticals, which are generally understood to be drugs that are structurally complex and often require special handling and delivery; are often administered in an office-setting; and can include complex molecules such as biologics.

Click to Enlarge
Another distinguishing feature of specialty pharmaceuticals is their high prices. Previous studies have shown that specialty drugs together account for less than 2 percent of all prescriptions written; however, these drugs make up almost one-third of total spending on prescription medications. It is common for these medications to cost thousands of dollars per patient per month.

Both the current state of prescription drug pricing and the projections of continued increases in drug spending in the years ahead have prompted a variety of proposals from both federal and state lawmakers.

Thursday, December 29, 2016

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 148

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 "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.

Wednesday, December 28, 2016

Top pharmacy challenges of 2017

High drug prices will continue to be the biggest pharmacy challenge for payers in 2017, sparked by the entry of many new specialty drugs on the market for some common chronic diseases— such as diabetes, heart disease, Alzheimer’s, and rheumatoid arthritis—and rare diseases, such as lupus and NASH (nonalcoholic Steatohepatitis, more commonly known as fatty liver disease).

Despite being used by only 1% to 2% of the population, specialty drugs accounted for 37% of U.S. drug spend in 2015 and are projected to reach 50% by 2018, according to the Express Scripts 2015 drug trend report, released in March 2016. While high drug prices will continue to plague the industry in 2017, the following four factors will exacerbate the problem:

1. Missing link between cost and outcomes

There is a lack of outcomes-based contracts with manufacturers but if you want physicians to buy into value-based reimbursement, payers need to put pressure on manufacturers to demonstrate value and look at outcomes differently.

Payer organizations are thinking about total cost of care, not just the price of single products, she says. They are looking at the continuum and range of medical and pharmacy costs tied to outcomes. One drug may be more expensive than an alternative but positively affects the total cost of care.

Outcomes-based contracting is more aligned with better health and lower costs. “We need a combination of strategies to create accessibility and affordability and align healthcare delivery and reimbursement based on value, not volume. We must hold manufacturers more accountable in contracts, creating large unit cost discounts day one and unique components to stand behind performance. If drugs don’t perform as promised, there should be more discounts.”

2. Sparse competition

“The challenge is timing in some therapeutic areas,” Fleming says. “For example, when Sovaldi came on the market 2014, as a treatment for hepatitis C, it was the only drug but by the end of the year, there were many more. The same thing is expected to happen with Alzheimer’s. There is the notion of competition to mitigate increases; with competition, payers and PBMs are able to negotiate with manufacturers, as well as improving clinical outcomes with more choices.”

Unfortunately, if some drugs don’t lose patent protection, Fleming warns there might be double-digit annual price increases. Bradbury also is concerned that the lack of competition in specialty drugs due to patent protection and too few drugs on the market for specific conditions are driving drugs to a higher price point.

Thursday, December 22, 2016

Pharmacy benefits: Super-sized, minimized or right-sized?

Simplifying product lines requires business decisions that can improve or decrease product quality, satisfaction and costs. Similarly, employers’ health benefit decisions to streamline choices can impact health care quality, patient satisfaction, work productivity and total healthcare costs. Over the past few years, healthcare benefits and choices have narrowed to manage costs. Thus, the number of in-network providers, pharmacies, and reimbursable treatments has decreased.

Within pharmaceutical benefits, medication choices can be limited using exclusive or restrictive formularies. Exclusive formularies cover only a subset of treatments for a condition. For example, patients who need alternatives excluded from the formulary pay the full cost. Restrictive formularies limit when medications are reimbursed based upon meeting certain criteria, such as liver damage from Hepatitis C treatment.

Thursday, December 15, 2016

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 147

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 "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.

Tuesday, December 13, 2016

Pay-for-performance drug pricing: drugmakers asked to eat costs when products don't deliver

The latest wrinkle in the fight against rising drug prices involves insurers and pharmacy benefit managers asking drugmakers to accept lower prices for the latest medicines emerging from their labs when they don't achieve the desired results.

Insurers like Aetna, Cigna and Harvard Pilgrim Health Care, as well as pharmacy benefit managers such as Express Scripts, are engaging major manufacturers including Novartis, Merck and Astra Zeneca in these risk-based deals because many of the latest blockbusters drugs are lacking long-term benefits data.

In most of the deals, insurers agree to offer reimbursement for a drug at a set price as long as the drugmaker agrees to pay a penalty if certain metrics aren't met. Drugs for combating diabetes, hepatitis C and heart disease are prime targets for the new pricing arrangements, where biomarkers like cholesterol, blood glucose or virus eradication can be used as measurable benchmarks.

Payers say the deals give them assurance that they won't be left holding the bag if a drug doesn't deliver its promised medical benefit. Drugmakers are willing to go along because it helps get their products to more patients more quickly.

Monday, December 12, 2016

"Don't Miss" webinar Tuesday December 13 at 2PM ET

How many businesses do you know want to cut their revenues in half? That's why traditional pharmacy benefit managers don't offer a fiduciary standard and instead opt for hidden cash flow opportunities such as rebate masking. Want to learn more?

A snapshot of what you will learn during this 30 minute webinar:

  • Hidden cash flows in the PBM Industry such as formulary steering, rebate masking and differential pricing 
  • How to calculate cost of pharmacy benefit manager services or CPBMS
  • Specialty pharmacy cost-containment strategies
  • The financial impact of actual acquisition cost (AAC) vs. effective acquisition cost (EAC)
  • Why mail-order and preferred pharmacy networks may not be the great deal you were sold


Sincerely,
Tyrone D. Squires, MBA  
TransparentRx  
2850 W Horizon Ridge Pkwy., Suite 200  
Henderson, NV 89052  
866-499-1940 Ext. 201


P.S.  Yes, it's recorded.  I know you're busy ... so register now and we'll send you the link to the session recording as soon as it's ready.

Thursday, December 8, 2016

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 146

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 "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.

Tuesday, December 6, 2016

Drugmaker sheds light on path of rebate dollars

[Click to Enlarge]
We hear from more and more people living with diabetes about the challenges they face affording healthcare, including the medicines we make. We take this issue seriously and have been thinking about what we can do to better support patients. This has become a responsibility that needs to be shared among all those involved in healthcare and we’re going to do our part.

As a first step, we've taken a position on affordability, outlining three tenets that will be our focus. One is creating more pricing predictability so customers like pharmacy benefit managers (PBMs) and payers can effectively anticipate and budget for our price increases. We will support that by limiting any potential future list price increases for our medicines to no more than single-digit percentages annually. This is one action we are taking immediately.

A second area of focus is transforming the drug pricing system, which is incredibly complex and has resulted in a lot of confusion around what patients pay for medicines. News reports on drug prices have left the public with an impression that companies like ours realize all the profits from the “list price” increases we’ve made over the last decade.

In other words, a list price increase by XX percent leads to an automatic XX percent profit for the drug maker. We believe that is misleading and here’s why: As the manufacturer, we do set the “list price” and have full accountability for those increases.

Monday, December 5, 2016

Integrating pharmacy benefit, medical benefit cuts costs

Managed care executives should attend to the comprehensive management of drugs that are covered on both the pharmacy benefit and medical benefit because both benefits contribute significantly to cost trends, according to one industry expert. 
Figure 1. Stylized Procedure for Using Episode
Groupers to Evaluate Provider Efficiency

Executives should care because specialty drugs used to treat many common chronic conditions are covered under both benefits; managing in the silos sub-optimizes clinical and cost management,” said John Fox, MD, senior medical director at Priority Health, who spoke at an online workshop from the Academy of Managed Care Pharmacy and The Pharmacy Group.

“Further, integration of utilization data, benefits, and management allows application of common principles across all benefit designs regardless of whether or not the drug is covered under the medical benefit, the pharmacy benefit or a separate specialty drug rider,” Fox said.

Top Integration Advantages

• Creation of a single P&T committee

• Guiding principles can be applied across benefits

Thursday, December 1, 2016

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 145

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 below are what the 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.


[Click to Enlarge]
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.

Monday, November 28, 2016

Side Effects: The new role of PBMs [VIDEO]

The root of today’s modern PBM formed decades ago. When we asked University of Colorado Skaggs School of Pharmacy Professor Robert Valuck if patients can have a discussion about drug costs in 2016 without mentioning the role of PBMs, he gave us a succinct answer. “Not fully you can’t,” he said. Not when they’re such an integral part in the drug supply chain.

Watch: Must See TV!
“25-30 years ago, insurance companies thought, gee, we have all of these claims. We’ve got to pay these claims. Someone has to pay these claims for us, and so these little companies started up called pharmacy benefit managers,” Valuck said. Today, PBMs have a three-fold purpose, according to Valuck.

They negotiate drug prices, they build a network of pharmacies, and they build formularies. A formulary is, in essence, the list of prescriptions drugs the PBM will cover, and how much the drugs will cost. In the last few years, through the use of formularies, PBMs have taken a much more active role in telling what drugs they want their customers to take.

Tuesday, November 22, 2016

A Sick Calculation About Prescription Drugs

When Christie Tucker's son Preston was diagnosed with diabetes, his insulin prescription cost just $40. Now, two years later, Christie is paying $650 for a six-week supply of the medicine.

White Paper: click to download
Many people reflexively blame drug companies for Christie's dilemma. But the firms producing Preston's insulin aren't making more money. Insulin list prices are going up, but net prices — the money drug firms actually receive — are falling sharply. The extra cash is instead landing in the pockets of pharmacy benefit managers.

Pharmacy benefit managers act as middlemen between drug companies and patients, pharmacists and insurers. They determine which medicines are covered, and at what co-pay or co-insurance level, for 210 million Americans' health plans. They're abusing this role to rake in enormous profits — at the expense of patients' health.

The gatekeeper role gives PBMs enormous bargaining power to buy medicines in bulk. Just three PBMs dominate 70% of the market, and pharmaceutical companies know they will not be able to access millions of patients unless they accommodate the demands of PBMs.

With that disproportionate negotiating power, PBMs coerce pharmaceutical companies into offering substantial discounts and rebates. There's nothing inherently wrong with this hardball strategy. In theory, PBMs do patients a great service by securing lower drug prices.

Thursday, November 17, 2016

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 144

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 below are what the 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.

[Click to Enlarge]
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.

Monday, November 14, 2016

Minnesota Department of Health finds drugs given in medical settings are big drivers of costs

Drugs given in medical settings are having a substantial impact on rising drug costs according to a new analysis conducted by the Minnesota Department of Health (MDH) in partnership with the PRIME Institute at the University of Minnesota.

Courtesy of MDH
The study analyzed claims data from 2009 to 2013 and found that the spending growth for drugs given in medical settings was nearly three times more than the spending growth for drugs from pharmacies (35.5 percent vs. 13.5 percent).

This finding sheds new light on the sources of growth in health care costs. This is the first time the state has compared the spending on drugs given in medical settings to those provided through pharmacies. Drugs given in medical settings are common for treating conditions such as cancer, multiple sclerosis, rheumatoid arthritis and autoimmune disease.

Thursday, November 10, 2016

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 143

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 below are what the 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.

Wednesday, November 9, 2016

Claims Analysis: Negotiated Pricing Between Preferred and Non-Preferred Retail Pharmacies

CMS Analysis: preferred vs. non-preferred pharmacy networks
CVS Health announced Tuesday that it expects to lose 40 million retail prescriptions next year because of new retail pharmacy networks that don't include CVS, such as those created by Walgreens' partnerships.

This year, Deerfield-based Walgreens formed partnerships with a number of pharmacy benefit managers, which are companies that manage prescription drug benefits for insurers and employers. Those partnerships make Walgreens a preferred pharmacy for people with certain health insurance plans, meaning medications for those customers are significantly cheaper at Walgreens and other in-network pharmacies than at drugstores that aren't part of those networks.

Tyrone's comment: A CMS analysis has proved this theory (cheaper medications in preferred networks) to be inconsistent at best. While medications may cost patients less at the point-of-sale, it turns out they could actually be more expensive to payers in a preferred network.

In September, Express Scripts, the pharmacy benefit manager for the U.S. military's health insurance program, announced that on Dec. 1 it would add Walgreens to the military health insurance program's network and drop CVS. That means those with military health insurance, known as Tricare, will have to get their prescriptions at Walgreens or other in-network pharmacies starting Dec. 1 or pay significantly higher rates for them elsewhere.

Monday, November 7, 2016

PAs (prior authorization) work, if done right

For a physician, it’s hard not to hate prior authorization programs. They interpose administrative hassles,  they are often not designed thoughtfully, they can delay care, and they interfere with autonomy. For a patient, it’s hard to like prior authorization programs. An outside party, often untrusted, second-guesses your physician – and your health feels like it’s held hostage.

[Click to Enlarge]
For a health plan administrator looking to improve the quality of care, reduce thoughtless use of expensive drugs, and lower costs it’s hard to see how not to impose prior authorization.

Lee Newcomber of United Health Care and colleagues reported in The Journal of Clinical Oncology Practice on a thoughtfully designed prior authorization program for chemotherapy implemented only in Florida – and compared costs in Florida compared to the rest of the Southeast, and then compared to the rest of the country.  Costs went down by 9% in Florida, and went up by 10-11% in the comparison geographies.   Only 42 cases (1%) were denied. Savings totaled $5.3 million for the pilot program.

The program used National Comprehensive Cancer Network (NCCN) guidelines, which were digitized by a third party.  Oncologists had to submit the minimal amount of information to get to a NCCN decision node, and were offered a series of choices. They only needed to get prior authorization if they were prescribing medications not listed as appropriate by NCCN.

Friday, November 4, 2016

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 142

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 below are what the 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.

Friday, October 28, 2016

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 141

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 below are what the 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.

Wednesday, October 26, 2016

Survey supports transparency of drug pricing by pharmacy benefit managers

A recent report found that customers are very satisfied overall with pharmacy benefit managers and their services. The report also indicated a slight increase in satisfaction from the previous year.

Pharmacy benefit managers (PBMs) have come under fire recently due to outrage over high drug prices, with some critics blaming PBMs for the cost growth. However, many PBMs attest that they have been saving patients and the healthcare industry money through their negotiated drug costs and formulary exclusion lists.

PBMs are also faced with rising drug costs, and they respond by removing drugs from their formulary lists when a less costly alternative is available. Since they can use these lists to negotiate prices, these policies have largely had a positive impact on costs, and have not been seen to affect patient access to medications, according to the Pharmacy Benefit Management Institute’s 2016 PBM Customer Satisfaction Report.
Figure 1


Despite criticism, overall satisfaction with PBMs continues to increase, according to the report, which found that customer satisfaction increased from 7.7 in 2015 to 7.8 in 2016. Included in the report are responses from 507 plan sponsors representing employers providing drug coverage for more than 54.7 million individuals.

Approximately 83% of plan sponsors indicated that their PBM is also aligned with their goals, which is important so employees can receive the services and care that is needed.

Tuesday, October 25, 2016

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 140

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 below are what the 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.

Friday, October 21, 2016

Employers Overpay 10-50% on Health Benefits: Time for a Second Opinion

It's astonishing how companies that will thoroughly check whether there's a receipt for a $58 dinner an employee reported, yet will literally squander millions unnecessarily on healthcare by using PPO networks designed to benefit health plans, not employers.

Tyrone's comment: Similarly, I'm astonished that I continue to come across third-party payers, such as self-funded employers, who don't know how much they pay PBMs and/or TPAs for managing the pharmacy benefit. This is far different than net plan costs as the PBMs take is hidden in the total pharmacy spend.

Price comparison: non-fiduciary PBM (incumbent)
vs. fiduciary PBM
At the big picture level, PwC has pointed out that more than half of healthcare spending adds no value (PDF). At a ground level, we see employers spending 55% less on health benefits with a benefits package better than 99% of the workforce. In other words, the best way to slash healthcare costs is to improve benefits.

CEO: I will be damned if I let healthcare put my company out of business

This dynamic is changing even more rapidly than I expected. A week doesn’t go by where I don’t get a CEO-awakening story from innovative benefit consultants like David Contorno, Jim Millaway, Keith Robertson and others. These great benefits consultants have often been encouraging some or all of the facets of the blueprint for wise healthcare purchasing for some years but risk-averse HR leaders were reluctant to introduce any change due to the dynamic described above.

Thursday, October 13, 2016

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 139

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 below are what the 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.

Wednesday, October 12, 2016

Insulin costs are way up, but drugmakers say PBMs are collecting the loot

Insulin list prices have skyrocketed in recent years--but it’s not drugmakers reaping the increases, they say. That would be PBMs, the latest villain in the ongoing U.S. drug-pricing debate.

[Click to Enlarge]
Targeted by critics complaining of big increases in the cost of insulin, pharma’s pointing the finger at pharmacy benefits managers, which are demanding larger rebates in return for access to their covered patients. It's those demands that are pushing drugmakers to raise their list prices, Enrique Conterno, president of Eli Lilly’s diabetes business, told The Wall Street Journal.

Take Lilly’s long-successful insulin Humalog, for one. Its list price currently sits at $254.80 per vial, more than double its list price in 2011. But with rebates and discounts factored in, Lilly nets less in Humalog sales now than it did in 2009, Conterno said.

The Indianapolis drugmaker's competitors--Lantus-maker Sanofi and Novo Nordisk--are feeling the pain, too. Both have already warned investors that falling net prices in the U.S. would hurt profits going forward; the average U.S. net price for Lantus is set to fall 10% this year after tanking by 17% last year, the WSJ notes, citing Bernstein estimates. And that’s after a list-price jump to $248.51 per vial from $114.15 in 2011.

The bigger problem? Thanks to a fragmented health insurance system, uninsured patients and those with certain healthcare plans are bearing part, if not all, of the increases themselves.

“There are more patients under high-deductible health plans and who may have a greater copay and coinsurance, and they’re being exposed to a larger share of the prices as well,” Harvard Medical School professor Aaron Kesselheim told the newspaper.

As the diabetes space continues to heat up, many industry watchers expect to see PBM formulary management tactics continue. They’ve already taken a serious toll on drugmakers in other spaces, too--such as hepatitis C and respiratory, where high prices and a wealth of competition have made payers aggressive about negotiating discounts.

But as vocal pharma pricing critic Steve Miller, CMO at leading PBM Express Scripts, told the Journal, his company is all for keeping net prices low despite the discount. “We never tell pharmaceutical companies we want high sticker prices. We want a low net price,” he said.

Tyrone's comment: Every PBM wants a low net price. The difference though between traditional (any non-fiduciary PBM) and fiduciary PBMs is the extent from which payers benefit from the low "net" price acquired by their PBM. In a fiduciary arrangement, it's 100% benefit and in all others it's a crapshoot. Consider this, any PBM that generates cash flow from ingredient costs and/or earned manufacturer revenue (rebates) increases their clients' net plan costs. So while I agree with Dr. Miller's point, it is somewhat misleading.   

He did, however, acknowledge that “certain patients get caught in the middle of this, and we have got to figure out how to put guard rails around that.” Setting a maximum pharmacy price could be one such guard rail, he said.

by Carly Helfand

Monday, October 10, 2016

One slide from my "don't miss" webinar Tuesday October 11 at 3:30 PM ET

Here is just one slide from my presentation at Tuesday's webinar with stakeholders from finance, HR, insurance, employee benefits, procurement and others.

Click to Enlarge

How many businesses do you know want to cut their revenues in half? That's why traditional PBMs don't offer a fiduciary standard and instead opt for hidden cash flow opportunities such as multiple MAC lists. Want to learn more?

Register: https://attendee.gototraining.com/rt/3034343502849349634
  
A snapshot of what you will learn in this 30 minute webinar:

  • Hidden Cash flows in the PBM Industry i.e. formulary steering and rebate disguising 
  • How to calculate cost of pharmacy benefit manager services or CPBMS
  • Specialty pharmacy cost-containment strategies
  • The financial impact of actual acquisition cost (AAC) and effective acquisition cost (EAC)


Sincerely,
Tyrone D. Squires, MBA  
TransparentRx  
2850 W Horizon Ridge Pkwy., Suite 200  
Henderson, NV 89052  
866-499-1940 Ext. 201

P.S.  Yes, it's recorded.  I know you're busy ... so register now and we'll send you the link to the session recording as soon as it's ready.

Thursday, October 6, 2016

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 138

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 below are what the 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.


Tuesday, October 4, 2016

Drugmakers Point Finger at Middlemen for Rising Drug Prices

Pharmacy benefit managers, or PBMs, oversee drug benefit plans for employers and health insurers. Their job is to hold down the cost of providing those benefits, which they do by choosing which drugs to cover and using that leverage to wrest lower prices from drugmakers through rebates. PBMs keep some of those savings but pass most of it on to their clients.

Click to Enlarge
But the system has some serious side effects, drug executives and other critics say. Because rebates are based on a percentage of a drug’s list price, PBMs have benefited as the price of drugs has skyrocketed in recent years.

Critics say these rebates also can encourage drug companies to increase prices more sharply than they would have done otherwise. For example, if a drugmaker wants to raise the price it gets for a drug by 6% to drive sales growth and offset research costs, it has to raise the sticker price even more than that to offset the percentage it rebates to PBMs, says Ron Cohen, chief executive of drugmaker Acorda Therapeutics Inc.

Tyrone's comment: Dr. Cohen hit the nail on the head. Another example, do you believe that a self-funded employer seeking 90 days supply of medication for their employees, from a non-fiduciary PBM's mail-order pharmacy, for just two months copay really gets that? No, the waiver [one month] is factored back into the payer's ingredient cost and explains, at least in part, why mail order medications are often times more expensive than retail. Remember, the unique selling position for prescriptions by mail are convenience and lower cost. This scenario is similar to the offset explained by Dr. Cohen as it pertains to rebates.

PBMs deny that they cause drug-price inflation, saying drug costs would be even higher without rebates. “We have every incentive to make costs as low as possible,” said Troyen Brennan, chief medical officer at CVS Health Corp., whose Caremark unit is one the biggest PBMs, along with UnitedHealth Group Inc.’s OptumRx and industry leader Express Scripts Holding Co.

PBMs compete aggressively on price to win business from “very sophisticated purchasers,” Mr. Brennan added.

Tyrone's comment:  It is true 20% of revenue generated by pharmacy benefit managers comes at the hands of some very sophisticated purchasers. However, the remaining 80% of purchasers are subject to ridicule, around the water cooler, about how unsophisticated they are with regard to pricing arrangements and the lack of transparency provided in them yet sign off on the deals. The key to eliminating overpayments is in-depth PBM knowledge and advanced negotiating skills. Otherwise, payers will continue to fall victim like Anthem Inc.

For many years, drugmakers defended the practice of privately negotiating rebates as a market-based alternative to government-run price negotiations. They also prospered under the rebate system, which largely failed to curb drug-price increases.

Pfizer Inc. Chief Executive Ian Read said recently that “the absence of rebates would be healthy for the system.” Drugmakers are paying bigger rebates to PBMs, Mr. Read said at an investor conference, but patients are paying more for prescriptions. “The rebates are being paid, and the copays are going up,” for consumers with drug coverage, he said.

Tyrone's comment:  I tend to agree. For the record, I  worked for one of the big five drugmakers Eli Lilly & Co. and can tell you these people weren't sitting around thinking of ways to take advantage of patients or payers. Sure prescription drugs are often very expensive but they're not as costly as the hospitalization that would be required if they didn't exist. I'm likely in the minority on this issue, but sometimes critics of drugmakers act as if drugmakers created the diseases which cause harm to people and then manufactured the drugs to profit from their own creation. In fact the opposite is often true; they develop drugs for which there may be no alternative other than surgery, chronic pain or death in order to prolong life. Having said that, PBMs should not be generating a single penny of revenue for themselves from rebates or any manufacturer revenue. All cost-savings should be passed fully on to payers. Drugmakers want market share and they're willing to compete against one another, on price and outcomes, without the need for so called "rebates."   

PBMs say they aren’t responsible for rising copays, which are set by health insurers and employers. Express Scripts, the largest PBM, says it advises clients to cap copays for even very expensive drugs at $150.

Tyrone's comment:  So the question is why do you advise clients to cap copays at $150.00? What about co-insurance is there any recommendation on that? Again, the lower the co-pay the more likely a patient fills the brand or specialty prescription from which a non-fiduciary PBM might profit from rebate dollars. Each plan must be evaluated on its own merit not based solely upon what a research study says should be the maximum copay.

“EpiPens are expensive because Mylan raised the price of EpiPens,” Steve Miller, chief medical officer at Express Scripts, said in a recent interview. “To blame it on distributors…is just ridiculous.”

Despite their purchasing power, PBMs have struggled to hold down drug costs. U.S. spending on prescription drugs is estimated to have risen 8% to $321.9 billion last year, compared with a 5.6% increase on all health-care consumption, according to federal data.

Many major drugmakers, meanwhile, have continued to report higher sales, driven in part by price increases.

Criticism of PBMs has accelerated as the industry has consolidated and grown more powerful, while also more-aggressively steering patients to drugs with the largest rebates. The industry’s top three account for three-quarters of the U.S. market—up from 49% in 2011, according to Jefferies LLC. Their combined operating profit was $10.1 billion last year, up 30% from 2013.

Tyrone's comment: PBMs provide a valuable service and deserve a reasonable return but along the way non-fiduciary PBMs learned they could profit from unsophisticated purchasers who help generate excessive returns. I don't put all the blame on non-fiduciary PBMs as some of it goes to the payers, and their representation, who permit such a lack of transparency. There is no question if the big three (ESI, Caremark and Optum) switched to a fiduciary model and changed nothing else net plan costs would go down significantly. The only problem is so would their market capitalization by half. 

Beyond rebates, PBMs collect other fees based on a percentage of drugs’ prices. PBMs charge drug companies “rebate administration fees” of 2% to 5% of product sales in exchange for tracking the rebates owed to their clients, and providing data on claims that drug companies use to assess market share. PBMs also collect percentage-based fees for distributing high-price drugs through their own mail-order pharmacies.

Express Scripts keeps in aggregate 10% to 15% of rebates, though some clients negotiate to have all rebates passed back to them and pay higher flat fees instead, Everett Neville, Express Scripts’ senior vice president for supply-chain management, said in a January interview.

Tyrone's comment: This may be true but allow me to shed some light. Some revenue coming from manufacturers to non-fiduciary PBMs aren't classified as "rebates." The rebate dollars might be classified as selling or administrative fees for the primary purpose of circumventing the contractual obligation to pass the dollars on to payers. So while a payer might be getting 90% of the rebate dollars it may only be recouping 40% of earned manufacturer revenue, for example. Finally, the rebate process is spearheaded primarily by PBMs not pharmaceutical manufacturers. 

Written by  Joseph Walker

Friday, September 30, 2016

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 137

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 below are what the 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.

Wednesday, September 28, 2016

Can 'Pay for Performance' Control High Drug Prices?

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Can payers save money on increasingly expensive prescriptions by setting prices based not on drugmakers' wishes, but on how well the medicines control, contain or cure disease?

The notion of tying drug payments to results, called "pay-for-performance pricing" or "value-based pricing," already is being tested by some health insurance companies, some pharmaceutical companies and Medicare. And just last week, the Oregon Health & Science University announced it will undertake a large-scale research project to examine how states could apply the concept to Medicaid.

Tyrone's comment:  If all the savings are passed-back then great! But, value-based pricing is rife with hidden cash flow opportunities for non-fiduciary pharmacy benefit managers. Traditional or non-fiduciary PBMs are aware of the attention being paid to existing pricing arrangements or overpayments (see ESI, Anthem dispute) so this new pricing arrangement could serve a dual purpose; to show an effort to control costs AND protect their margins. Put another way, pay-for-performance arrangements provide an opportunity for non-fiduciary PBMs to protect margins while giving the "appearance" of reducing drug costs. How will a payer know when a drug has failed and just as important what happens to the revenue when a manufacturer credits it, for example? Remember this, better doesn't necessarily mean good. The concept is both brilliant and misleading so close the loopholes!

If payers are able to adopt a workable performance- or value-based pricing system on drugs, they may be able to hold down spiraling Medicaid spending, said Matt Salo, executive director of the National Association of Medicaid Directors.

Medicaid, the federal-state health insurance plan for the poor, is staggering under escalating prescription drug prices just as patients and private insurers are, and the costs are straining state budgets. On average, roughly a quarter of a state's budget goes to Medicaid spending.

Medicaid spending on prescription drugs for Medicaid recipients rose 24.3 percent between 2013 and 2014, in part owing to an increase in enrollment under the Affordable Care Act. That was nearly double the increase in total U.S. prescription drug spending in that same period, according to federal data.

And there's every reason to think the increase in spending will continue as drugmakers prepare to introduce dozens more "specialty drugs," high-priced, complex medications developed from living cells to treat chronic conditions such as hepatitis C, HIV, cancer, rheumatoid arthritis and multiple sclerosis.

Although they barely existed a decade ago, last year specialty drugs accounted for nearly a third of Medicaid spending, or about $16.9 billion. Specialty drugs make up just 1.5 percent of claims, but they could play a big role in the rise of Medicaid spending on drugs.

Something has to give, said Jeff Myers, CEO of Medicaid Health Plans of America, the trade association representing Medicaid managed care plans. "A system in which the manufacturers are pricing to get the most money out of taxpayers isn't workable," he said.

Pay-for-Performance

Currently, Medicaid and federal health plans such as Medicare and the U.S. Department of Veterans Affairs are constrained in bargaining with manufacturers over drug prices.

Pharmaceutical companies enter into agreements with the federal Centers for Medicare and Medicaid Services on what drugs all state Medicaid programs will make available to patients. In return, the pharmaceutical companies agree to give the states fixed discounts off their average price.

But those prices are set by the manufacturers, and the manufacturers are not governed by any price ceilings, nor are the prices based on the drugs' success, such as whether they control or cure a patient's disease.

Pay-for-performance or value-based pricing would change that. It would tie payments for prescription drugs to their effectiveness, whether they did what they were designed to do.

How well do medications for high blood pressure or cholesterol, for example, keep patients in healthy ranges for each? How well do medications control symptoms of autoimmune diseases? How much do cancer drugs extend life? And how much do the drugs save the health care system by enabling patients to avoid medical treatments they no longer need?

How to Price

Evaluating the effectiveness of a drug will be essential to pricing under the concept. One tool health plans could use for evaluating cancer drugs to establish a price has been developed by the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center, in New York.

Called the "DrugAbacus," the tool creates a price for cancer drugs based on how many years of additional life they provide, the severity of their side effects, the rarity of the disease and the novelty of their chemistry.

<< Read More >>

Thursday, September 22, 2016

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 136

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 below are what the 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.


Tuesday, September 20, 2016

[Video] PBMs | Bigger Doesn't Mean Better

This video answers the question how can a boutique pharmacy benefits manager compete [price] with a large Fortune 500 PBM. Click below to watch.


Education is a kind of insurance policy in maintaining the trust you've placed in your PBM.

Thursday, September 15, 2016

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 135

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 below are what the 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.

Tuesday, September 13, 2016

Chicken Soup for the Self-Funded Employer: Foolproof PBM Contracts

Having spent all of my post-graduate years (15) in the pharmaceutical industry, I've come to know two immutable pharmacy benefit management principles and they are:

1) You get what you exactly measure [payer-side]
2) The things that you measure, costs and outcomes, will get gamed 

Analytics may help ease the pain but don't alone solve the problem which is excessive overpayments. Furthermore, analytics can worsen the problem because purchasers rely too heavily on it. In other words, don't rely solely on analytic software programs and all the neat reports they spit out especially if what's being measured is inherently flawed (i.e. AWP and MAC).

Eliminating overpayments is done two ways:

➤ Sophisticated purchasers, of PBM services, with super strong negotiating skills lead the procurement of services. 
➤ Enter into a fiduciary or foolproof PBM Services Agreement. A business process is still required to systematically measure performance throughout the contract term. 

Here is a screenshot of just some of the language in a fiduciary contract.
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Douglas Adams wrote in Mostly Harmless, "a common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools." I'm reminded of this each time I read something about the Anthem, Express Scripts dispute or Wells Fargo.