Friday, August 26, 2016

Reference Pricing: Actual Acquisition Cost (AAC) for Top Selling Generic and Brand Prescription Drugs - Volume 132

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.


Thursday, August 25, 2016

Hand caught in cookie jar, United Healthcare changing drug overpayment program

UnitedHealthcare says it will stop overcharging some customers for prescription drugs.  But experts warn the company will find another way to make up the money - at your expense. When one revenue stream is closed off a non-fiduciary PBM will look to make up for that lost revenue by employing or increasing other hidden cash flows. That is ballooning; watch below.


If you've held a 15-minute introductory phone conversation with me then you're aware of the hidden cash flow tactic referred to as clawbacks.

Our "Medical Waste" investigative series showed how United, the nation's largest health insurer, and Optum, its pharmacy benefit manager, overcharged some customers for prescription medication. The practice forced many customers to pay a copay that's higher than the cost of the drug.  United then claws back the extra money from the pharmacist.  Optum labeled it an "overpayment program."

"The hand in the cookie jar has been caught," says Doug Hoey of the National Community Pharmacists Association. "There's an old saying that sunlight is the best disinfectant. And I think some sunlight has been poured into their situation, and they're trying to make the best of it. "

United sent us this statement:


"We have reviewed our pharmacy benefits and will update our plans to ensure UnitedHealthcare members pay the lowest price at the pharmacy."

When we asked if this meant United plans to eliminate the "overpayment program" that forced customers to unknowingly overpay for prescriptions, United responded:

"Once fully insured customers move to the updated benefit plans, our members will pay the lowest price at the pharmacy and the repayment program will no longer be necessary."

Tyrone's comment:  Wait, what about self-funded customers? Self-funded employers should be checking to verify these overpayments aren't occurring within their plans. Higher OOP (out-of-pocket) expenses for patients leads to non-adherence which ultimately means increased hospital or physician costs. 

"They would never say that they are doing something they shouldn't be doing," Hoey says. "But the fact that they're changing their practices… to me, that's an admission that they were over the line."

We kept peppering United with questions, asking if the updated plan will increase premiums. In other words, does United plan to cover the losses they'll see on prescription drugs with an increase in premiums?  They told us details are being worked out.

We asked how the change would impact members, when it would happen and, again, whether members will see a premium increase.  Again, there was no clear answer from United.

"I think they're realizing that this is wrong, that there's a huge liability here, whether fraud or illegal," says insurance fraud investigator Susan Hayes.  "But it's definitely wrong and I think they realize it."

Hayes says these changes will only impact some United customers.  You may not realize it, but United offers two types of plans to most businesses: one a fully insured plan, the other a self-funded plan.  Large companies may take part in a self-funded plan in which the employer pays all of the costs, like part of the copays, and United simply manages the program.

In a fully insured plan, usually for smaller- to mid-size businesses, United takes the risk - it pays the copays and charges the employer a fee. According to the United email and Hayes' interpretation, the change will only take place for fully insured customers - most likely employees of smaller to mid-size companies.

Hayes tells us United may simply raise premiums on these fully insured plans. She says self-funded plans and customers should be asking United questions.

Read More >>

Tuesday, August 23, 2016

New Report Identifies Most Expensive Specialty Drugs

RGA Reinsurance Company, a subsidiary of Reinsurance Group of America, Incorporated, (NYSE: RGA) today released a report identifying 183 high-cost specialty drugs, defined as costing greater than $50,000 annually or $7,000 monthly, based on wholesale acquisition costs (WAC) of each product identified. The report and accompanying management tool serve as a resource to educate and inform healthcare professionals about high-cost drugs.
[Infographic: click to enlarge]

Of the 183 drugs on the list, 126 (69%) cost more than $100,000 per year, and 48 of those (26%) cost more than $200,000 annually. The most expensive drugs in annual cost include:

  • Glybera, which is indicated for the treatment of lipoprotein lipase deficiency ($1,210,000). This product is not yet approved by the U.S. Food and Drug Administration (FDA), but is available in Europe.
  • Ravicti, indicated for the treatment of urea cycle disorders ($793,632)
  • Lumizyme, indicated for the treatment of Pompe’s Disease ($626,400)
  • Carbaglu, indicated for hyperammonemia ($585,408)
  • Actimmune, for the treatment of severe, malignant osteopetrosis and chronic granulomatous disease ($572,292).

According to the report, hemophilia and related disorders are some of the most expensive diseases to treat medicinally. Treatment options include, 34 different specialty drugs listed at $100,000 or more per year. RGA’s report, which is available to the company’s clients, includes a detailed analysis and disease breakout on hemophilia drug costs.

Read more >>

Monday, August 22, 2016

Who is getting rich from the price of prescription drugs?

The health insurance industry has successfully generated a robust national discussion of drug pricing in the U.S.  However, it is not the complete story. Today, most drug companies offer large rebates to pharmacy benefit managers on behalf of different health plans and employers to reduce patients’ out-of-pocket costs. The problem is a significant portion of the savings is not being passed onto the public.

[Click to Enlarge]
Until recently, advocates and policymakers had no idea that health plans extract large price discounts on prescription medicines. This changed rather spectacularly when health insurance giant Anthem Inc. and Express Scripts, the nation’s largest PBM, went to war over how much each company was taking in from drug rebates. In litigation Anthem filed in March with the U.S. District Court for the Southern District of New York, the insurer sued Express Scripts for $15 billion in damages, claiming the PBM, which negotiates prices with drug makers on behalf of insurers and employers, is reaping an “obscene windfall” by not passing along enough of the price breaks to Anthem. Express Scripts then countersued in April, arguing Anthem was the one at fault.

Not surprisingly, when two behemoth corporations sue one another, the battle makes national headlines. However, the Anthem-Express Scripts situation has also produced a valuable side benefit: News of the lawsuits shed light on the extent to which pharmaceutical company rebates can lower the costs to health plans and employers for prescription drugs. According to estimates from ZS Associates, a pharmaceutical marketing consulting firm, drug companies pay about $40 billion annually in rebates with the size of the rebate averaging 30 percent of a medicine’s sales.

Thursday, August 18, 2016

Reference Pricing: Invoice Cost (Gross) for Top Selling Generic and Brand Prescription Drugs - Volume 131

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, August 17, 2016

Solutions for Reducing Patient Cost Sharing for Prescription Medications

In 2010, Fletcher was diagnosed with chronic lymphocytic leukemia. Within 6 months of starting treatment, his disease was in remission. But this good news did not last as he relapsed just 9 months later. He began treatment again, but the results were poor: Fletcher developed congested lungs, a persistent cough, and cataracts that left him temporarily blind. So, his doctor proposed a different treatment. Exhausted, but hopeful, Fletcher was ready to try the new drug until he heard what it would cost him—$2310 out of pocket (OOP) for just one month of treatment. His best chance of survival would consume nearly his entire month’s take-home pay.

It was not long before Jody’s medical bills ate through her family’s savings following her diagnosis with acute lymphoblastic leukemia in 2009. To keep her cancer in remission, Jody is taking a kinase inhibitor that she will likely need for the rest of her life. But when she went to pick up her first dose at the pharmacy, she, too, was shocked to learn how much that lifesaving drug would cost her —$5640 for the first month alone.

Everything that she and her husband had put away for their children’s college educations has gone to keeping Jody alive. Besides leukemia, Fletcher and Jody have something in common: they have had health insurance throughout their cancer treatment journey. Yet, because of the high cost sharing associated with their medications, Fletcher and Jody have faced profound difficulty accessing the treatments prescribed for them.

THE IMPACT OF THE RISING COST OF TREATMENT ON PATIENTS

Figure 1
Over the last decade, employers and other providers of health insurance have shifted more costs onto patients due to a multitude of factors that includes the rising cost of healthcare services. This trend is especially troubling for patients living with a blood cancer diagnosis, since available treatments typically consist of high-priced specialty drugs and other cost-intensive healthcare services. A common discussion with this cost-shifting trend is the steady increase in consumer premium payments, as employee premium contributions have increased 83% since 2006 (compared with a 54% increase for employers over the same period).

Monday, August 15, 2016

Should drug prices be tied to patient outcomes?

Global pressure on health spending is forcing the $1 trillion-a-year pharmaceutical industry to look for new ways to price its products: charging based on how much they improve patients' health, rather than how many pills or vials are sold.

In the United States, both parties are promising fresh action on drug prices whoever wins the White House. In Europe, economies are stalled, squeezing state health budgets. And in China and other Asian markets, governments are getting tougher with suppliers.

Source: AARP Annual Rx Price Trends Report
Pricing drugs based on clinical outcomes is one way to ensure that limited funds bring the most benefits to patients now and pay for the most promising medical advances in future. Some experiments in pricing have already been made. But shifting the overall industry to a new model requires improvements in data collection and a change in thinking, say drug pricing experts.

"Eventually, we are going to get there," said Kurt Kessler, managing principal at ZS Associates in Zurich, which advises companies on sales and marketing strategies. "But it is a long, tough slog because it's difficult to get the right data and agree on what the right outcomes are to measure."

In the past, governments and insurers made room in their budgets for new drugs by switching to cheap generics as patents expired on older drugs. But today generics already account for nearly nine out of every 10 prescriptions in key markets like the United States, and fewer big drugs are going off patent.

Friday, August 12, 2016

Reference Pricing: Invoice Cost (Gross) for Top Selling Generic and Brand Prescription Drugs - Volume 130

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.

Thursday, August 11, 2016

In-Office Dispensing: A Better Value?

Over the last several years, the proliferation of oral cancer drugs has caused many oncology practices to establish in-house pharmacies using either a board of pharmacy or physician’s medical license.

Click to Enlarge
Today, almost half of US community oncology practices have an in-office dispensing (IOD) program, and that number continues to grow. However, due to the burgeoning volume of pricey oral oncolytics coming to market, IODs are now competing with retail pharmacy chains, pharmacy benefit managers (PBMs), and a growing number of independent specialty pharmacies.

With increased competition, the challenge IOD practices now face is to prove the value of what they do. Why should drug manufacturers continue to allow them access to their drugs? Why should health plans and pharmacy benefit managers allow them in their networks? What benefits do IODs offer that other pharmacy channels cannot deliver?

Fortunately, as value-based reimbursement models emerge in the oncology market, including the recently launched Oncology Care Model (OCM) pilot, IODs are well positioned to demonstrate their superiority to other pharmacy channels.

In broad terms, IODs can provide better patient care and outcomes—at lower cost—through a more clinically integrated and streamlined process. It is useful to describe the value IOD brings to physicians, patients, payers, or manufacturers in two ways: having the pharmacy closer to the patient and having the pharmacy closer to the physician.
Benefits of a Pharmacy Closer to the Patient

Having the pharmacy closer to patients allows them greater convenience and improves their overall healthcare experience. Because cancer treatment can be exhausting, patients often do not have the time, energy, or mobility to search for and coordinate with a pharmacy that can fill their prescriptions. It is important to recognize that costly oral oncolytics usually cannot be found at the local pharmacies most patients use regularly.

These drugs are only available through a limited number of pharmacies, which are knowledgeable on specialty medications and equipped with the capabilities to support patients before and after they begin therapy. These pharmacies are often selected by the manufacturer or payer. Consequently, it’s often confusing to patients which pharmacy must be used.

Cancer care for patients can be greatly simplified and better coordinated at a practice with IOD. Using pharmacy management software, staff can help patients determine insurance coverage, complete payer-imposed prior authorizations, and most important, find copay assistance when very expensive therapies are needed.

All of this can be done while the patient is in the clinic receiving other treatment or visiting the oncologist. In addition, the actual dispensing of the drug can be synchronized with other elements of the patient’s regimen, whether it be surgery, radiation, or infusion. These examples of better coordinated care equate to a faster treatment time and greater patient convenience—a shared goal of all healthcare stakeholders.

A common challenge to payers is oral oncolytic drug waste. This waste is usually created because pharmacies will typically fill a 30-day supply that is more than needed because the patient will frequently discontinue or delay therapy for a myriad of reasons, such as intolerance or tumor progression.

See more at: http://www.onclive.com/publications/oncology-business-news/2016/august-2016/inoffice-dispensing-is-better-value#sthash.eInrQ0D3.dpuf

Friday, August 5, 2016

Reference Pricing: "Net" Invoice Cost for Top Selling Generic and Brand Prescription Drugs (Volume 129)

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 healthcare 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.

Thursday, August 4, 2016

Big companies form an alliance to find ways to reduce pharmacy costs

The path that prescription drugs take from the lab to your medicine chest is a long and complicated one. And the journey is made still more complex by the role of a very important, but little understood middleman known as the pharmacy benefits manager.

These companies fill a crucial role by negotiating with drug makers on behalf of health plans, unions, and some employers to get the best price, which is particularly critical as the cost of medicines is ever-rising. Yet PBMs also stir controversy over concerns they may not always pass along savings — called rebates — they negotiate for their clients, but instead pocket those funds to fatten their own bottom lines.

So a group of more than two dozen of the largest US corporations — including such household names as Macy’s, Coca-Cola, and American Express — recently formed an alliance to find ways to reduce health care costs. And one idea is to overhaul the way that PBMs are paid. Whether they have the clout to succeed is unclear, but Wall Street estimates the members of the alliance collectively spend $3 billion per year on pharmaceuticals.

The goal is to provide some transparency into a murky world — and it’s long overdue. To keep it simple, the Health Transformation Alliance, as it’s called, may seek to rewrite their contracts in order to eliminate any undisclosed drug company rebates that PBMs might hold back for themselves. Instead, the companies would pay PBMs for the actual cost of medicines, plus an agreed-upon fee.
Source: www.thethrivingpharmacist.com
Presumably, this would lower corporate health care bills that, in turn, could lower employee costs. There have been previous efforts over the years by corporate America to peel back the PBM curtain, but this approach would amount to a radical shift for the largest PBMs – notably, Express Scripts, CVS Caremark and United Healthcare’s Optum — which collectively manage about 70 percent of the pharmacy benefits in the United States.

Right now, though, big PBMs have the upper hand.

For instance, in their contracts with drug makers, a PBM may classify a rebate they’ve negotiated as a type of fee, allowing them to keep it rather than pass it on to their clients. This places the client at a big disadvantage because the contracts are proprietary, which makes it hard to know what the rebates really look like in the first place.

Read more >>

Tuesday, August 2, 2016

A Path Forward for Lowering Prescription Drug Prices

[Click to Enlarge]
It’s no secret that prescription drug prices are the fastest rising part of our healthcare system. That’s especially true in the cases of specialty and life-saving medications used to treat cancer, hepatitis C, and other rare diseases and ailments. But price increases are also prevalent among more common prescription medicines used by millions of Americans. The totality of these unsustainable, across-the-board price increases is impacting patients and those seeking access to such medications; it is also weighing down our health care system and the U.S. economy.

A recent Morning Consult opinion piece appears to miss this point, and moreover includes several citations that merit further clarification. For example, the author cited a controversial figure that pegs the average cost of developing a new prescription drug at $2.6 billion. But that number is far from accepted within the medical community. When the figure was initially floated in 2014, the director of policy and analysis for Doctors Without Borders put it plainly, “If you believe that, you probably also believe the earth is flat.”

Transparency about what is spent and how prices are set would improve the quality of the debate over drug pricing and actual value.

But the larger problem with arguments about the cost of developing drugs is a misunderstanding about the nature of “sunk costs.”  Simply put, sunk costs do not affect optimal price decisions.  Drug company cash flow today finances today’s R&D and marketing and profits.  Yesterday’s R&D was financed with yesterday’s cash flow. Today’s prices are set to maximize profits given today’s competitive conditions, regardless of how much or little any specific drug cost to develop.

Let’s be clear: the reason to avoid draconian price controls is to keep innovation flowing.  But we do not need to allow drug companies to make as much as they are making to keep today’s R&D flowing, since so much of their current cash flow – more than they spend on R&D according to Global Data is spent on marketing.  Clearly they could cut marketing, which rarely improves clinical quality for any patient, without harming today’s investment in the drugs of the future.

The core complaint about today’s competitive conditions is that we’ve allowed an unbalanced situation to develop.

We have lately over-incentivized innovation with very long extra periods of monopoly called “exclusivity” during which developers can keep their clinical trial data secret and force competitors to perform expensive and redundant trials.  This is the main problem with new incredibly expensive biologics and the biosimilars we are unnecessarily delaying from providing market competition. We have also allowed FDA backlogs for approving new generic drugs to lengthen due to lack of resources, and this has prevented lower cost generic drugs from getting to market.

Even established companies like Pfizer have piled on, increasing prices twice this year. The first increase came in January when prices for 133 of its medications rose by an average of 10.4 percent. It happened again just last month with another price hike averaging nearly 9 percent.  These hikes have nothing to do with past drug development costs.

This is not to debate the importance of developing life-saving drugs. The research and innovation of new treatments is critical to healing countless illnesses and diseases. Yet affordability and long-term health system sustainability must also be part of the equation.

Data from the Institute for Healthcare Informatics shows that over the last five years, prices for specialty drugs that require careful handling or administration have increased by a staggering $54 billion. These price increases accounted for 73 percent of increased U.S. spending on medications.

Read more >>