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