Thursday, December 28, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 199)

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 actual acquisition costs or AAC. 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 26, 2017

CVS-Aetna merger is a robber baron's dream come true

Predicting a merger’s effect on consumers and competition is usually difficult. But in the case of the recently announced $69-billion merger of CVS Health Corporation and Aetna, we have hard evidence from previous health-care mergers that indicate this combination is a bad deal for consumers and competition.

Click to Learn More
If this pharmacy and pharmacy benefit manager (“PBM”) giant and insurance company are allowed to join forces, the results will be higher prices and less choice for payors and consumers. The antitrust cops should just say no to this deal.

History can teach important lessons that undermine CVS’ claims that consumers will win from this deal. Look at CVS’ acquisition of Caremark, one of the nation’s dominant PBMs.

Tyrone's commentary:

If integrating the medical and pharmacy benefit requires that you relinquish flexibility and cost controls, the disadvantages of integration far outweigh the advantages. Disadvantages may include:
  • Plan members may pay U&C (usual and customary) prices, which are higher than discounted prices
  • Formulary and rebate arrangements may not be available or are significantly limited
  • Plan sponsors lack authority and flexibility and are typically unable to adjudicate plan limitations, plan exclusions, enforce generic dispensing mandates or validate appropriate drug pricing
There’s already a lack of transparency when it comes to drug prices and employers may have even less information if the insurer and the pharmacy benefit manager are the same entity. It’s going to be harder to get behind the curtain.

CVS, a retail pharmacy giant, took advantage of vertical integration through its acquisition of Caremark, a PBM giant, by excluding competition, reducing patient access to vital healthcare services from the pharmacists of choice and driving up prices.

[Read More]

Thursday, December 21, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 198)

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 actual acquisition costs or AAC. 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 19, 2017

CVS-Aetna Merger Will Influence Employers’ Benefits Decisions: Aon

CVS Corp.’s proposed purchase of Aetna Inc. will affect decision-making by a majority of large and mid-size U.S. corporations on employee health benefits, a survey by benefits consultant Aon Plc found.

The new Aon survey, which included responses from decision makers at 450 medium and large-size corporations, provided additional insight into how CVS and Aetna customers may view the deal.
  • Sixty-one percent of survey respondents, including ones that are not customers of CVS or Aetna, said the deal would affect their decision-making process on health benefits, with 23 percent saying it would accelerate a reassessment of healthcare strategy and 38 percent saying it would delay any such moves until the transaction’s impact could be understood.
  • Among a smaller group of 210 respondents, 52 percent surveyed by Aon said they planned to keep their pharmacy benefits separate from medical coverage. An additional 15 percent said they are considering separating those contracts.
If integrating the medical and pharmacy benefit requires that you relinquish flexibility and cost controls, the disadvantages of integration far outweigh the advantages. Disadvantages may include:
  • Plan members may pay U&C (usual and customary) prices, which are higher than discounted prices
  • Formulary and rebate arrangements may not be available or are significantly limited
  • Plan sponsors lack authority and flexibility and are typically unable to adjudicate plan limitations, plan exclusions, enforce generic dispensing mandates or validate appropriate drug pricing
There’s already a lack of transparency when it comes to drug prices and employers may have even less information if the insurer and the pharmacy benefit manager are the same entity. It’s going to be harder to get behind the curtain.

[Read More]

Thursday, December 14, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 197)

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 actual acquisition costs or AAC. 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 13, 2017

Consultants warn 'change or get out of the way' next year

Certain healthcare industry middlemen including pharmacy benefit managers, drug wholesalers and insurers will get squeezed out if they don't adapt and reaffirm their value, according to a new report from PricewaterhouseCoopers.

Intermediaries like PBMs that work for payers to negotiate with pharmaceutical companies on the price of their products have been targeted for their role in huge price hikes that have plagued the industry.

These middlemen should increase price transparency, deliver better pharmaceutical and clinical data to boost patient care, and diversify their business lines to secure their place in the industry, PwC's Health Research Institute said in its annual report issued Tuesday.

Providers must expand beyond their sector or get left behind. They will need to form cross-sector relationships to share data and deliver more integrated care models to survive, the report said.

"Most PBMs and distributors don't play a specific role in the healthcare ecosystem—some share infrastructure and have an interest in data they could use," he said. "Unless they use (their role) toward driving wellness through care delivery, finance care or provide new diagnostic tools, they will get squeezed out."

Tyrone's comment: Excellent advice for all PBMs to heed including TransparentRx.

[Read More]

Monday, December 11, 2017

Prescription Drugs May Cost More With Insurance Than Without It

There are a lot of bad faith actors, on the PBM sell-side, engaged in concealing the truth. Employers, their brokers and advisors, must be fully engaged to uncover said truth. Full engagement requires a maintenance period which extends for an indeterminate period of time far beyond renewals and reading standard reports. If you read my blog, follow me on LinkedIn or done business with me you know I intend to help.

Reference Pricing for Rx's (Click to Enlarge)
Consequently, this help comes at a price. It makes me unpopular in the eyes of just about everyone except the commercial payers who benefit from the information I share. To this I say so what...right is right, wrong is wrong. It is stories like the one below which tighten the knot in the pit of my stomach.

This article was written through collaboration between The New York Times and ProPublica, the independent, nonprofit investigative journalism organization.

Having health insurance is supposed to save you money on your prescriptions. But increasingly, consumers are finding that isn’t the case.

Patrik Swanljung found this out when he went to fill a prescription for a generic cholesterol drug. In May, Mr. Swanljung handed his Medicare prescription card to the pharmacist at his local Walgreens and was told that he owed $83.94 for a three-month supply.

Alarmed at that price, Mr. Swanljung went online and found Blink Health, a start-up, offering the same drug — generic Crestor — for $45.89. It had struck a better deal than did his insurer, UnitedHealthcare. “It’s completely ridiculous,” said Mr. Swanljung, 72, who lives in Anacortes, Wash.

Tyrone's Comment:  That Blink Health struck a better deal is doubtful. Most likely, UHC struck a better deal but tacked on a huge mark-up for itself (it did not pass back all the savings it negotiated). Because the mark-up is hidden in the plan sponsor's final [ingredient] cost, this is the reason for the higher cost with insurance.

[Read More]

Thursday, December 7, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 196)

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 actual acquisition costs or AAC. 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 6, 2017

"Don't Miss" Webinar: How to Slash PBM Service Costs, up to 50%, Without Changing Vendors or Benefit Levels

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

Here is what some participants have said about the webinar.

"Thank you Tyrone. Nice job, good information." David Stoots, AVP

"Thank you! Awesome presentation." Mallory Nelson, PharmD

"Thank you Tyrone for this informative meeting." David Wachtel, VP

Recertification Credit Hours: 2
"...Great presentation! I had our two partners on the presentation as well. Very informative." Nolan Waterfall, Agent/Benefits Specialist

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,
TransparentRx
Tyrone D. Squires, MBA  
3960 Howard Hughes Pkwy., Suite 500  
Las Vegas, NV 89169  
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.

Monday, December 4, 2017

CVS buying Aetna in deal valued at $69 billion

This is vertical integration at the highest level. The deal forces competitors to deliver more value and clients of PBMs to be even more sophisticated in their contract negotiations. For some tips on what to look out for see my earlier post Specialty Drugs Paid Under Medical Benefit Circumvent Cost Control Measures.

CVS, though, has been mired in a prolonged sales slump — pharmacy same-store sales slid 3.4% in the third quarter — and some analysts believe the Aetna deal has less to do with improving healthcare services than finding other ways to grow amid the threat of competition from Amazon and Wal-Mart Stores.

Source: Managed Care Magazine
CVS Health is buying Aetna for $69 billion in cash and stock in a long-expected deal that reflects a rapidly shifting health care landscape. A key component of CVS' business is its CVS Caremark pharmacy benefit management subsidiary. The deal could help CVS encourage Aetna's health plan participants to use the CVS/Caremark mail order prescription system and shop at the pharmacy company's retail stores, which will be able to offer more in-store health services.

If CVS-Aetna is approved, the union could ignite additional mergers in health care. Amazon is poised to enter the drug business in some fashion, leading to further disruption and uncertainty in the industry.

[Read More]

Thursday, November 30, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 195)

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 actual acquisition costs or AAC. 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.

Monday, November 27, 2017

Non-Fiduciary Pharmacy Benefit Managers: The Sopranos of the Pharmaceutical Industry

[Video] Click to Watch
It's true non-fiduciary pharmacy benefit managers can drive up the cost of prescription drugs. This isn't even up for debate any longer. However, there is another side to this story one which many plan sponsors, and their advisers, are reluctant to point out. PBMs will provide transparency and disclosure to a level demanded by the competitive market and generally rely on the demands of prospective clients for disclosure in negotiating their contracts.

In other words, PBMs have learned how to leverage the purchasing power of the unsophisticated plan sponsor to their financial advantage. The truth is most, if not all, of the excessive costs embedded in non-fiduciary PBM service agreements can be eliminated if stakeholders (HR execs, CFOs, benefits consultants, brokers etc...) concern themselves less with self-preservation and more with self-education.

How The PBM Mafia Works

Most PBM decision makers have absolutely no medical training and have no idea how or why a particular therapy works. They are simply there to manage cost, and to fatten their own wallets during the process. For every drug transaction, PBMs receive both a reimbursement fee as well as an administrative fee. In addition, when PBMs place a particular drug on formulary, they receive rebates and more fees from manufacturers which are not passed on to the consumer.

PBMs operate in a world with little oversight and even less transparency. In other words, PBMs are middlemen who are paid on both sides of the transaction—similar to the way in which Tony Soprano and his Captains ran their garbage business in New Jersey.

PBMs claim to drive down costs in healthcare by negotiating discounts, managing formularies to obtain rebates, encouraging generics and non-specialty medications, as well as increasing the use of their own mail-order pharmacies. In reality, however, PBMs actually drive costs up by using their “middleman” position to increase their own profits. They work to negotiate contracts with drug manufacturers, health plans and pharmacies that maximize their profits at expense of patients and physicians.

[Read More]

Friday, November 24, 2017

Specialty Drugs Paid Under Medical Benefit Circumvent Cost Control Measures

So much for the 10-15% purported cost savings achieved when integrating medical and pharmacy benefits, well not quite. There is a big opportunity to trim prescription drug costs, especially specialty, when the two benefits are integrated. However, if integrating the medical and pharmacy benefit requires that you relinquish flexibility and cost controls, the disadvantages of integration far outweigh the advantages. Disadvantages may include:
Click to Learn More

  • Plan members may pay U&C (usual and customary) prices, which are higher than discounted prices
  • Formulary and rebate arrangements may not be available or are significantly limited
  • Plan sponsors lack authority and flexibility and are typically unable to adjudicate plan limitations, plan exclusions, enforce generic dispensing mandates or validate appropriate drug pricing
  • There’s already a lack of transparency when it comes to drug prices and employers may have even less information if the insurer and the pharmacy benefit manager are the same entity. It’s going to be harder to get behind the curtain.
Medical and pharmacy benefit integration is not new. Carriers have been managing it now for almost two decades! Although, the data mined today is far superior due to advances in computer software thanks to machine learning and AI. The other, non-technical, difference is that carriers have decided recently to share this capability and use it as a marketing strategy to keep existing clients or win new business.

Health plans are facing increased costs from specialty drugs, which are expected to represent 55% of all drug costs in a few years, with about half of that managed under the medical benefit and paid for the same way as medical services, according to claims data that was analyzed by CVS Health and cited in its publication Insightsfeature. That means many of those pricey medications are skirting the safeguards put in place to manage the cost of other drugs.

Read more>>

Wednesday, November 22, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 194)

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 actual acquisition costs or AAC. 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, November 21, 2017

OptumRx is now caught up in the court battle between Anthem and Express Scripts

I'm often asked, "Tyrone why does TransparentRx charge a fee when requested to respond to a request for proposal?" There are several reasons. 

1.  There is tremendous value in the information a fiduciary PBM submits in response to a RFP. The burden is placed on us [as a fiduciary] to deliver radical transparency as opposed to the plan sponsor having to drive disclosure of performance details important to them. 

Figure 1:  Developed by James Prochaska
2.  We've learned even offering a fiduciary standard may not make a difference if the proposal evaluators aren't pharmacy benefits subject matter experts. This includes but is not limited to being well-versed in PBM contracts, plan design and formulary management. These evaluators know a serious problem exists, a lack of transparency, yet haven't taken any meaningful action to fix it (see figure 1).


3.  We provide recommendations on how to better manage pharmacy benefits whether we win the business or not.

4.  Sometimes a RFP isn't that at all it's really a request for information or consulting services disquised as a RFP.

On Tuesday, the U.S. District Court for the Southern District of New York will hold a hearing on Express Scripts’ motion (PDF) to compel Optum to turn over documents related to a drug pricing proposal it prepared for Anthem. The insurer requested the proposal after it sued Express Scripts back in 2016, seeking $14.8 billion in damages from what it argued was the pharmacy benefits manager’s failure to provide “competitive benchmark pricing” on prescription drugs.

Thursday, November 16, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 193)

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 actual acquisition costs or AAC. 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, November 14, 2017

Reverse Auction Helps New Jersey Save $1.6 Billion on Prescription Drugs

Non-fiduciary PBM companies have learned how to leverage the purchasing power of the unsophisticated plan sponsor purchaser to their financial advantage. There are several ways to learn about the specific services and fees of those PBMs.

One is to engage a consultant to help select the most suitable PBM. The other identification process involves putting out a traditional request for proposal (RFP) that asks interested PBMs to respond with specific information in a very structured format. RFPs are usually lengthy and very time-consuming to complete.
Click to Learn More
The request for information (RFI), on the other hand, is typically a shorter less-structured instrument that asks a number of PBMs to answer specific questions. When coupled with a reverse auction, the RFI is a powerful tool in combating high PBM service fees.

The biggest driver of savings for the state of New Jersey was a change in how the state selects its pharmacy benefits manager. Companies will now participate in a reverse auction, competing on price to provide prescription drugs. That change is expected to save $350 million in 2018 and $1.6 billion over the next three years.

Friday, November 10, 2017

"Don't Miss" Webinar: How to Slash PBM Service Costs, up to 50%, Without Changing Vendors or Benefit Levels

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?

Here is what some participants have said about the webinar.

"Thank you Tyrone. Nice job, good information." David Stoots, AVP

"Thank you! Awesome presentation." Mallory Nelson, PharmD

"Thank you Tyrone for this informative meeting." David Wachtel, VP

"...Great presentation! I had our two partners on the presentation as well. Very informative." Nolan Waterfall, Agent/Benefits Specialist

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)
  • Recertification Credit Hours: 2
  • Why mail-order and preferred pharmacy networks may not be the great deal you were sold


Sincerely,
TransparentRx
Tyrone D. Squires, MBA  
3960 Howard Hughes Pkwy., Suite 500  
Las Vegas, NV 89169  
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, November 9, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 192)

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 actual acquisition costs or AAC. 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 8, 2017

Controversy heats up over pharmacy benefit manager DIR fees

Click to Learn More
Pharmacy benefits managers (PBMs) are in hot water again if small and specialty pharmacies’ voices can be heard. Besides a litany of complaints from various pharmacy industry stakeholders about PBM operations and business tactics—from a lack of transparency to controlling formularies—now PBMs are being accused of retroactively applying direct and indirect remuneration fees (DIR) to pharmacies.

DIR fees—arrangements between Part D plans/PBMs and pharmacies—include fees for network participation, periodic reimbursement conciliations, failure to comply with quality measures and the gap between a target reimbursement rate in a pharmacy agreement and the aggregated rate actually realized by a pharmacy. They fees often are assessed at different intervals rather than at point of sale (POS).

A paper commissioned by the Community Oncology Alliance and prepared by Frier Levitt law firm, describes original DIR fees as payments or other reimbursement received by PBMs from a variety of sources to lower the ultimate “true cost” of a medication. That has since transitioned into “backdoor” fees imposed by PBMs on pharmacy providers after a drug claim is submitted, adjudicated and even paid out to a pharmacy, according to the paper.

Read More>>

Tuesday, November 7, 2017

PBM Service Fees: The One Topic Which Rarely Comes Up During Contract Negotiations

For 5 minutes, I contemplated the word I'd use in this post to describe my feelings about the lack of meaningful engagement self-funded employers, and their advisers, have when it comes to proactively managing pharmacy benefits.

Sure everyone complains about the lack of transparency, ambiguous contract languange, spread pricing and other opaque PBM practices, but what are you doing different today than you were ten years ago, really? The word I chose is fascinated.

I'm fascinated because it's an opportunity to help solve a problem. Please, please, please if you've never considered the PBM service fee in how you procure pharmacy benefit management services watch the 5-minute video below.


How can so many smart and educated people never require a PBM to disclose its service fee? Let's be clear the service fee is not the same as the admin fee nor is it the final plan pharmacy cost. Hidden in the final plan cost is the PBM service fee. Why aren't these smart people pulling this number out? One possible answer is that decision-makers lack a meaningful level of engagement.

Thursday, November 2, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 191)

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 actual acquisition costs or AAC. 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 31, 2017

Only 30% of Employers Get Pharmacy Benefit Manager Contracts

According to the National Pharmaceutical Council, only 30 percent of employers have a complete understanding of their pharmacy benefit manager (PBM) contracts. Based upon my experience, the percentage of employers who have a complete understanding of PBM contracts is far lower than 30 percent.
Click here to get better!
I can't stress enough how important it is that anyone involved in the procurement of PBM services be an expert in the industry. The stakes are far too high for your team to be comprised of folks who "pick it up as they go." Take a look at what Michael Critelli, former CEO Pitney Bowes, wrote to me recently.

"Tyrone I am pleased that you wrote the particular essay I downloaded. Many corporate benefits departments do not understand that they are overmatched in negotiating with pharmacy benefit managers, as are the "independent consultants" who routinely advise them. The first step in being wise and insightful is admitting what we do not know, and you have humbled anyone who touches this field."  

Employers want to provide the best health benefits for their employees while getting strong value in return for the money they spend on prescription drug benefits which requires self-assessment. Still not convinced you might be overmatched? Take my 3-minute PBM IQ assessment to determine your level of PBM sophistication.

Monday, October 30, 2017

Taking a More Active Role: The Main Ingredient for Controlling Prescription Drug Costs

Learn More
On a larger scale, employers know they can’t really do anything about the cost of drugs unless the government steps in, said Cheryl Larson, vice president of the Midwest Business Group on Health. But what they can do is review the performance of their PBM and work off that to manage costs.

Employers are frustrated with the current system, she added. But “a lot of large employers don’t want to disrupt the environment they’re in,” she said. “They don’t want disruption for their employees and family members.”

Employers are responsible for finding the best benefits they can to provide high quality cost options for employees, she said. Included is the PBM contract, for which many employers is vague yet ironclad.

“It’s all about the contract,” she said. “You need to demand transparency, and you need to negotiate financial and nonfinancial contracting terms for both direct and indirect revenues for the PBMs administering your plan.”

For instance, if a consumer’s co-pay at a pharmacy is more than the cost of the drug, PBMs often utilize a clawback practice and the consumer still pays the co-pay. The remainder then goes back to the PBM, not the employer or the patient.

The More In-House Approach

Caterpillar Inc. is one example of a large employer that took an active role and did something disruptive to deal with pharmacy spend. “We carved out a lot of the strategic decisions PBMs make on behalf of employers and made them ourselves,” said Todd Bisping, global benefits manager at the Peoria, Illinois-based heavy equipment manufacturer. This shift of strategic power began in the mid-2000s, he said.

Caterpillar opted to build its own networks — that is, determine which pharmacies to contract with and give its members access to — rather than relying on a PBM to do so. It decided to determine its own pricing methodologies in contracts rather than using PBM-negotiated drug prices. It also designed its own formulary, a list of brand name and generic prescription drugs that employees covered by a specific health care plan can use.

Caterpillar still uses a PBM, Optum, for tasks like prior authorizations, customer support lines and some step therapies. When they started this process over a decade ago, they were using Milwaukee-based Restat, which was bought by Catamaran in 2013. Optum then acquired Catamaran for $12.8 billion in 2015 and renamed the company Optum Rx.

Over the past 10 years, Caterpillar slowly brought more elements in-house. It started in 2005 when Caterpillar began implementing changes in the way it did formularies and continued over the next decade to include changes in supply chain. A team of professionals managed the process, including doctors who help with the clinical aspects of the design, a third-party pharmacy consultant, the Caterpillar benefits team and their PBM.

When Caterpillar began directly negotiating with pharmacies, the largest hurdle was finding someone willing to partner with them. “No one was really contracting directly with pharmacies in the self-insured employer space, ” said Bisping. But “that’s how you bring innovation into the market.” In 2009, Walmart was the first pharmacy to partner with them, he added.

One major aspect of these first contracts was dealing with the transparency issue. While many companies mean transparency in rebates when they use that term, Caterpillar adopted a broad definition, one that took into account transparency in any revenue associated with drug spend, like marketing fees.

Caterpillar’s decision to take over these strategic functions saved the company hundreds of millions of dollars since its inception in the mid-2000s, and it’s saved the employees tens of millions of dollars, said Bisping. The company spent less in 2015 than in 2005, he added. Since then, they’ve seen costs rise but it’s still much less than the industry average, he said.

Fewer than 10 companies have adopted the same strategy as Caterpillar, according to Bisping. It’s a complex, disruptive process that requires commitment and culture change. Also, many companies outsource a lot of their expertise, so they don’t necessarily have the expertise in-house.

But, despite the time commitment to get this internal function operating, he’d recommend it to other companies that want to control drug costs.

Caterpillar accomplished its positive drug price trend without relying on HDHPs or cost-shifting. “We didn’t pass our costs onto employees to accomplish that,” he said. “In that period, we didn’t make any design changes because we were controlling the cost.”

[Source]

Thursday, October 26, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 190)

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 actual acquisition costs or AAC. 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 25, 2017

The Top 200 Prescription and Non-Prescription Drugs, by volume, of 2017

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Sean Kane, Pharm.D., of Rosalind-Franklin University recently introduced the ClinCalc DrugStats Database and the 2017 Top 200 Drugs on his ClinCalc.com website.

The website was originally created to do calculations that would help him as a resident and then fellow practitioners. He noticed that the Top 200 drugs list has been absent for the last 5 years. Through a mechanism he describes on his website, he’s come up with a viable Top 200 and Top 300 drugs that can be valuable for pharmacy schools that accounts for some of the changes in the calculating of these lists and the expense of getting the most recent.  

The annual Top 200 Drugs is a list that takes advantage of Pareto’s Principle, that 80% of effects come from 20% of causes. The Top 200 drugs as the 20% represents the 80% of prescriptions that are actually filled. While the actual percentages deviate from that 80/20, the principle holds. However, the Top 200 Drugs list presents a problem for employee benefits professionals, students and educators. What order should one learn them in?

Tuesday, October 24, 2017

Anthem, CVS Health sign 5-year deal for a new PBM dealing a blow to Express Scripts

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Three years ago I published a white paper titled, Strategies to Enhance Pharmacy Benefit Managment of a Self-Insured Employer's Employee Prescription Drug Plan. In it I discussed how employers should take more control over how their pharmacy benefit is managed. Specifically, one recommendation I made was to start your own PBM or form a strategic alliance. Anthem did both! I'm not writing today to brag or boast...well maybe a little. More important, I want to shake things up a bit to effect change.

Anthem and Express Scripts have been at odds for some time. As a result, Anthem decided to start its own pharmacy benefits manager to replace its contract with Express Scripts. Anthem and CVS Health have signed a five-year agreement to launch IngenioRx. CVS will provide prescription fulfillment and claims processing services, as well as expertise in point-of-sale engagement, such as member messaging and Minute Clinic. It will begin offering PBM services starting Jan. 1, 2020, coinciding with the end of Anthem's current contract with Express Scripts.

What am I getting at? Anthem decided to start its own PBM but maybe for your organization the best option is to start smaller. Carve-out the specialty drug benefit or formulary management, for example. Health insurance is the third largest expense on the P&L with prescription drugs accounting for a larger share of those dollars than outpatient and inpatient hospital costs. The point is to simply take more control and don't give TPAs or PBMs free reign over your drug benefit. For the record, a few formulary modifications or increasing employee cost share doesn't count as taking control.

Usual complaints notwithstanding, the pharmacy benefit deserves much more attention than its getting. The smart companies are getting better educated and then taking action to control drug costs without negatively impacting healthcare outcomes. What are you doing different, really?

Thursday, October 19, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 189)

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 actual acquisition costs or AAC. 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.

Monday, October 16, 2017

Formulary Management: Don't Allow the Fox to Guard the Henhouse

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A formulary agent may be restricted or unrestricted, with restrictions defined by indication, service, or specialty group (eg, infectious disease); medical staff hierarchy (eg, attending only), or patient population (eg, cystic fibrosis, pediatric). Off-criteria uses of formulary agents constitute a nonformulary use. Ideally, medication utilization evaluations should be conducted on a regular basis to assess compliance with formulary restrictions.

When multiple agents within a therapeutic category are available on the market (such as low-molecular weight heparins or histamine-2 receptor antagonists), drug class reviews are often conducted in an attempt to declare therapeutic equivalence and maintain only 1 preferred agent on the formulary. An increasing number of medications within a therapeutic category can lead to greater price variation among the medications, which creates potential for significant cost savings through declaring agents therapeutically equivalent and allowing them to be interchanged.

In addition to cost savings, patient safety is enhanced by minimizing look-alike sound-alike medications through streamlined inventory and the medication reconciliation process. Minimizing the number of agents available on a formulary also improves staff competency and knowledge about specific medications. Selecting an agent for inclusion in a formulary requires numerous operational considerations:
  • With respect to purchasing, it is important to determine if a drug is supplied by the organization’s pharmaceutical distributors or if it is a specialty/limited-distribution drug requiring direct shipment. Not all pharmaceutical wholesalers are able to supply the drug product, particularly high-cost specialty medications. Since most pharmacy departments purchase products from wholesalers at a cost minus discount, the pharmacy will be charged a higher price if the drug being reviewed comes from another source, potentially resulting in a significant increase in drug expenditures due to the loss of the cost-minus discount. Manufacturers can switch between different distribution strategies to best fit the needs of patients and providers as the marketplace changes. 
Read more >>

Thursday, October 12, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 188)

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 actual acquisition costs or AAC. 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.