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

Learn More
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

Click to Download
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

Click to Learn More
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.

Tuesday, October 10, 2017

The Spread and I'm not talking about Miracle Whip

Some pharmacy benefit managers tell clients they don't engage in spread pricing when in fact they do. There is only one way to be sure and this video explains how.


Friday, October 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 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, October 5, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 187)

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 3, 2017

Hospital Impact—Pharmacy benefit managers are a lot like car dealers

Any time you try to buy a car, the same question is considered: Am I getting the best price? Sure, price tags are displayed on freshly waxed cars, but it’s always possible to talk the salesman down. The system for car purchases—where Americans buy cars from dealerships instead of directly from the companies making them—makes it hard to know how much it actually costs to make a car, so it’s hard to know you’re getting the best price.

Click here to learn more
The same system applies to buying lifesaving prescriptions. Drug manufacturers set a list price, but consumers rarely pay that, and how much drugs should really cost is uncertain. That’s because of pharmacy benefit managers (PBMs), large corporations wielding enormous power over which drugs you get. Just three big PBMs control nearly 80% of the market, using their size and influence to negotiate drug prices with manufacturers. However, big PBMs have mixed incentives around containing drug costs and managing premium costs, while maximizing profits from their own in-house pharmacies.

Tyrone's comment: While I agree with the premise of this article's title, there is one small yet very important distinction that must be made. That distinction is "non-fiduciary" pharmacy benefit managers are a lot like car dealers. Moreover, how do we classify those trusted advisors who steer their clients to these car dealers or non-fiduciary pharmacy benefit managers without first having won radical transparency? PBMs are not created equally with some volunteering radical transparency and others much less so. Be sure to do your [plan sponsors] homework which requires going far beyond simple spreadsheet analysis and 25 page RFPs. Who is watching the watchers?

In the past few years, PBMs have ramped up their mail-order and specialty pharmacies to lock down profits and exclude independent pharmacies. Increasingly, they’re exploiting a Medicare provision allowing them to charge “direct and indirect remuneration fees” to pharmacies within their network. They're ratcheting up the use of these fees—ostensibly part of Medicare reimbursement—to price out competition: local independent pharmacies, where pharmacists have personal relationships with patients and partner with referring providers to support patient care.

[Read more]

Saturday, September 30, 2017

Impact of Biosimilar Approvals on the Pharmaceutical Market

Biosimilars are an emerging area in the specialty pharmacy community and beyond. As the pharmaceutical industry continues to feel outside pressure from costly drugs, strategies to reduce health care spend are being sought.

Although biologics account for less than 1% of all dispensed prescription drugs in the United States, it accounts for one-fourth of all prescription spending. Concern surrounding high price tags of biologics continues to rise, and biosimilars offer the potential to provide patients with less costly alternatives.
Table1: some of the trials being conducted on biosimilars

In an interview with Specialty Pharmacy Times, Yogesh Soneji, a partner at Trinity Partners, discusses the future of pharmacy and the effect of biosimilar approvals.

SPT: What impact can biosimilar approvals have on the pharmaceutical marketplace?
Soneji: I think these are exciting times. It’s almost a new era for the industry in general, [with] the launch of recent biosimilars and some uncertainty around what happens in the near term. TABLE 1 lists some of the trials being conducted on biosimilars, and if successfully completed, these products may become available in the near future.

When you think about the marketplace there are so many different players. A way I think about this is there are going to be 2 camps: the brand to whom a biosimilar is being launched against and then the biosimilars themselves. The impact is going to be different depending on what side of the fence you are on.

For the branded companies that have biologics today, it’s going to be a little more uncertain in the near term of what happens, because besides the upcoming launch timing of biosimilars, they also have to have to guess what the pricing (of biosimilars) is going to be, what the biosimilars will discount their drugs at, and there is going to be some uncertainty, at least in the near term, on how to mitigate that. On the other hand, for the companies that are actually launching these biosimilars, that represents a whole world of opportunities.

SPT: How will biosimilars affect future drug prices?
Soneji: Only time will tell, but if you even see what is going on recently, you have biologics with different price points, with one in the 15% discount list price and another over 30% discounted list price. I think it’s already been mentioned that the branded players, like Remicade, have been more aggressive on contracting on their own drug and getting better contracting in order to safeguard their business in the near term. I think there is no doubt that we will see prices go down and spiral, but the question isn’t about whether they will or not. I think the question is how fast and what that path looks like. If it’s going to happen very quickly or if it’s going to happen in a steadier manner over time.

I do think in the long run, biosimilars will drive down prices. One key aspect with pricing that’s a little more complicated in the drug industry, as you might have seen, is it is not very transparent about what the price of the drug is.

We see list prices mentioned regularly in press releases about Inflectra and what their list price is compared to the list price of Remicade. But I think the key here is for us to keep an eye out for not just the list price, but what is the net price, which takes into account the rebates and discounts which can be negotiated on a payer basis, and what happens to those and what path those take. Because that is what drives decisions, especially from the payer side. Which drugs they put on formulary, which drugs they prefer to use at the end of the day, what really matters with pricing is net price that payers have to pay including contracts/rebates and discounts.

Read more >>

Thursday, September 28, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 186)

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, September 26, 2017

Cost Containment Strategies and Vendor Contracting Employers’ Top Health Plan Concerns

As health care plan utilization places second in rising medical costs, the runner-up still isn’t going unnoticed among plan sponsors.

Click to learn more
When asked to rank cost-management strategies implemented by group health plans in 2017, survey respondents to a recent survey by the Segal Group listed prescription drug cost management strategies and improved vendor contracting as plan sponsors’ main concerns. “Using specialty pharmacy management; intensifying pharmacy management programs; contracting with value-based providers; increasing financial incentives in wellness design; and adopting a high deductible health plan (HDHP),” were the top five recorded by plan sponsors.

The findings, according to the study, demonstrate how sponsors are pushing utilization by encouraging high quality, low cost providers, as well as following strategies to lower costs, including the “use of custom and limited provider networks, expansion of dedicated primary care clinics that are on or near work-sites and, for some industries, continued migration to tax advantaged health savings accounts (HSAs) and HDHPS.”

Tyrone's comment:  Brokers, consultants and plan sponsors are better served when they roll up their sleeves and become more knowledgeable about the inner-workings of PBM services. Unfortunately, most purchasers are essentially winging it picking up secondhand information as they go hoping something sticks. A 250 question RFP doesn't guarantee much if you can't get important disclosure details to hold up in the contract language, for example. Education is the key to eliminating overpayments for pharmacy servicesRemember the fight is not about you or me, it's about the patients who rely on us to make affordable and quality healthcare available to them - this very important point often gets lost during the procurement process. Success dictates you acquire knowledge far beyond the functional role of a PBM. 
   
In response to these results, Edward Kaplan, national health practice leader for Segal, suggests sponsors adopt a “three-pronged approach to the challenge of health care cost management that encompasses vendor management, plan design management and population health management.”

Read more >>

Monday, September 25, 2017

Pfizer Files Lawsuit Against J&J, Claiming Anticompetitive Practices

Source: Pink Sheet Pharma Intelligence
Pfizer filed suit against Johnson & Johnson (J&J) on Wednesday for allegedly using anticompetitive practices to prevent less expensive versions of its rheumatoid arthritis (RA) drug to thrive in the budding biosimilar market.

J&J has sold the injectable biologic Remicade for nearly 2 decades, generating $4.8 billion in US sales last year alone. This injectable biologic drug is widely used to treat RA, Crohn’s disease, and other inflammatory disorders, according to the Chicago Tribune.

Pfizer’s Inflectra was the second biosimilar to receive FDA approval.

If Pfizer wins the case against J&J, it could pave a new path that would discourage brand name companies from cutting deals with insurers to limit competition in the biosimilar marketplace, according to the Chicago Tribune. However, if J&J comes out on top it could continue to fuel strategies that thwart competition, according to the article.

Tyrone's comment:  While this is a first in the biologics industry, these types of lawsuits (generic vs brand manufacturers) are not uncommon. It's a clear indication biosimilars are a serious threat to brand competitors and will soon come to market in mass. J&J knows the future of biotech includes biosimilars so they are delaying the inevitable in an attempt to hold on to the cash cow for as long as possible. Because cost will eventually come down as a result of these lawsuits and innovation, this is a good thing for self-funded plan sponsors - stay tuned.

“This is the first lawsuit that is challenging anti-competitive behavior in the biologics industry, and that is very important because this is the wave of the future––this is where a lot of the innovation is taking place today,” Michael Carrier, law professor at Rutgers Law School, told the Chicago Tribune. “It really is an uncharted path, in terms of what competition should look like going forward.”

Read more >>

Thursday, September 21, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 185)

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, September 18, 2017

New Hep C Pricing Model: A Game Changer for Self-Funded Employers

Click to Learn More
For as long as I can remember pharmacy benefit managers have blamed pharmaceutical manufacturers for the high cost of prescription drugs. Drugmakers do share some of the responsibility but so to do pharmacy benefit managers.

Because it essentially eliminates the PBM mark-up, AbbVie’s pricing strategy for its new Hep C drug Mavyret is disruptive to the traditional PBM revenue model. Abbvie is not going to pay a rebate and instead price it [rebate] back into the list price in the form of a significant list price discount. This move forces non-fiduciary PBMs to consider Mavyret for inclusion in their formularies even though the pricing strategy is not aligned with their own interest of needing manufacturer revenue to protect top line revenue.

The looming question is will non-fiduciary PBMs include Mavyret as a preferred drug in the HCV therapeutic class on their formularies. It is less costly and as efficacious as any other drug in the HCV class so it should be a no brainer right? Wrong. If the PBM decides to exclude or list the drug as non-preferred it's likely because their interests aren't aligned with those of their clients'. Let's wait and see.

Read more>>

Friday, September 15, 2017

Insurers cutting back on drug coupons amid concerns over consumer costs

With many drug prices rising, consumers often pull out coupons or discount cards from drugmakers to save money when they buy medications at pharmacies.

But some insurers, including in Illinois, are limiting how those discounts may be applied amid concerns they’re driving up health care costs for everyone. Curbing the coupons could mean more money out of consumers’ pockets in the short term, but in the long run could also help hold down drug prices and health care costs, say critics of the cards and coupons.

Ex. Drug Coupon
Blue Cross and Blue Shield of Illinois told its members with individual plans this year they can still take advantage of the discounts, but they won’t get credit toward their deductibles or out-of-pocket maximums. Cigna only allows coupons to be used for specialty drugs — medications used to treat rare or complex conditions. UnitedHealthcare and Aetna declined to comment on their policies on the discounts.

A number of experts and advocates for lower drug prices applaud any actions aimed at stemming the use of copay cards and coupons, which are available online, through the mail or from doctors.

Tyrone's comment: I'm not one of those individuals who doesn't like drug coupons. However, I do agree that patients should not be rewarded by having coupon amounts applied to their deductible or MOOP. Let's keep it real, non-fiduciary PBMs and health plans don't like coupons because typically the products with coupons available won't pay rebates which takes away from the revenue they would have earned from those products which do pay rebates. Plan sponsors follow suit because their PBM or carrier says it's a bad thing. If a patient is unable to start or complete specialty drug therapy, due to cost which a coupon may have alleviated, the resulting hospital bill will cost more in the long run. Is it about the patient or not? 

Typically, patients with individual and employer-based plans can use the cards or coupons to save money on their insurance copays for certain prescription medications at the pharmacy. While a coupon can reduce all or part of a patient’s copay, the insurance company still has to pay its full portion for what might be a high-priced drug — a cost that opponents of the discounts say is ultimately passed on to all consumers in the form of higher insurance premiums.

Such discounts made news last year amid outcry over the skyrocketing costs of EpiPens, sold by Mylan. As part of its response to the uproar, Mylan offered $300 savings cards to patients with nongovernment insurance to help lower their out-of-pocket costs. Mylan still faced criticism that the discounts wouldn’t help everyone as much as simply lowering the price would.

“The copay coupons are a scam by the drug companies,” said David Mitchell, president and founder of Patients for Affordable Drugs, a nonprofit that doesn’t take money from drug companies or insurers. “Effectively we wind up, all of us, paying a higher price for our health insurance because they just steered us to a more expensive drug that ultimately gets paid for by someone.”

Read more>>

Thursday, September 14, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 184)

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, September 13, 2017

PBMs Look to the Future

Pharmacy benefits managers have evolved from claims processing to home delivery, managing formulary, specialty pharmacy, and negotiating with manufacturers.

With the ongoing backlash against them—complaints of lack of transparency and regulation, conflicts of interest created through owning specialty and mail order pharmacies, perverse incentives, and rising pharmacy costs—PBMs may decide to make some changes in how they operate.

Table 1
Susan Pilch, JD, Vice President, Policy and Regulatory Affairs for the National Community Pharmacists Association (NCPA), believes that heightened demand from employers for information about where their pharmacy dollars are going and what their contracts mean could force PBMs to come to the table and address these concerns.

But can the industry live without PBMs, she wondered. “We will always need claims processors—a valid PBM activity—but we would like to move PBMs away from their role as gatekeeper of drugs and their costs,” she said. “We need oversight to hold PBMs accountable, but it’s hard to place demands when you don’t know what PBMs are doing.”

Tyrone's comment: A fiduciary-model PBM addresses these concerns yet spokespersons at the highest levels of organizations like NCPA aren't sufficiently talking about it. Have they written the fiduciary model off as unattainable because behemoth PBMs say they won't provide it? Big breakthroughs occur with persistence despite those who say it isn't possible.