Sunday, January 29, 2017

Pharmaceutical Companies Not Seeing Majority of Drug Revenue

A new study finds that pharmaceutical companies may not be retaining a majority of profits accrued from prescription drug sales.

In a study conducted by Berkeley Research Group, the investigators found that pharmaceutical companies only realize 39% of initial gross drug expenditures.

Prescription drug spending has skyrocketed in the last few years, which has caused many stakeholders to demand increased pricing transparency. Pricing scandals, such as the recent outrage over EpiPen, has caused Americans to become skeptical about the reasoning behind dramatic drug price increases.

Certain measurements of drug costs do not show the whole picture, and can lead to an inaccurate picture of the gross spend by the customer, and an overstatement of the profits made by manufacturers, according to the study.

Although the chain of payment can be complicated, it can be summed up by 3 transactions: initial gross spending on the drugs by patients and insurers, discounts, and rebates/fees paid by the manufacturer. This multi-step chain of wholesalers, pharmacies, and other entities can create confusion about drug costs.

Wholesalers purchase the drugs that are then sold to pharmacies and healthcare providers, and pharmacy benefit managers (PBMs) negotiate lower prices through their buying power for certain health plans or employers.

Due to the lengthy supply chain, prices inflate down the line, which leads to patients paying higher prices for their prescription drugs. However, manufacturers do provide rebates and discounts to certain patients, health plans, or PBMs, which results in lower costs.

Additionally, manufacturers are required to provide significant discounts to government health plans and other government institutions, such as Medicare or Medicaid. This acts to reduce net spending by the government, but also reduces profits realized by pharmaceutical companies, according to the study.

In the study, the investigators considered rebates, discounts, and fees paid, to show a more complex picture of pharmaceutical manufacturers’ profits and spending.

See more at: http://www.specialtypharmacytimes.com/news/pharmaceutical-companies-not-seeing-majority-of-drug-revenue#sthash.HNdgqrIY.dpuf

Thursday, January 26, 2017

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 152

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, January 25, 2017

Diplomat Pharmacy, Inc. has published a new report on the state of specialty pharmaceuticals

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The report offers insight on developments in emerging specialty therapies. Last year, the FDA Center for Drug Evaluation and Research (CDER) approved 22 novel new drugs. While there was a reduction in novel new drugs compared to previous years, there were several expanded indications for previously approved therapies that allowed these drugs to reach additional patient populations. New approvals included a mix of oncology, immunology, rare diseases, and other disease states.

Although the quantity of novel new drugs was lower in 2016, important new drugs became available in each of the broad disease states covered by specialty pharmacy. Specialty drug products accounted for approximately half of new drugs and biologics approved in 2016, similarly to in 2015. Nine specialty agents were approved for rare diseases.

"The specialty pharmacy industry continues to show exceptional growth," said Paul Urick, Diplomat's president. "The development of new drugs, as well as expanded indications for previously approved treatments continues to make the robust specialty drug pipeline one of the major drivers of growth."

The pipeline is expected to produce more novel new oral oncology drug approvals in 2017 than in 2016, with multiple approvals forecasted in breast cancer and blood cancers.

To view the report, visit http://bit.ly/2jnTRwl.

Monday, January 23, 2017

Secret rebates erode drugmaker revenue, industry study says

Branded drug companies’ share of total U.S. spending on their products is declining, in part because of an increase in secret rebates paid to middlemen, according to an analysis sponsored by an industry group that’s been seeking to deflect scrutiny of rising prices.

Of the estimated $349.1 billion that insurers and patients paid for brand-name drugs in 2015, $218.6 billion, or 63 percent, was realized as revenue by drugmakers, according to an analysis paid for by the Washington drug lobby, Pharmaceutical Research and Manufacturers of America. In 2013, pharma companies kept $177.5 billion, or 67 percent, of the $264.9 billion in gross expenditures for brand-name drugs.

Pharmaceutical companies are facing pressure from Washington lawmakers and patients over increasing prices for medications such as insulin, which diabetics need to survive. At a press conference last week, President-elect Donald Trump said the industry is “getting away with murder” and threatened to force companies to bid for government business. Drugmakers say significant discounts and rebates paid to middlemen, such as pharmacy benefit managers that negotiate prices for insurers and other payers, reduce their revenue.

“Manufacturers are offering greater and greater rebates to gain access to patients,” Aaron Vandervelde, managing director at the Berkeley Research Group consulting firm and the report’s lead author, said in an interview. “That is largely offsetting the list price increases.”

Thursday, January 19, 2017

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 151

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, January 18, 2017

Plan Sponsors Zero In on Specialty Pharmacy Costs in 2017 Benefits

Plan sponsors are focusing hard on specialty pharmacy costs for 2017, looking at unbundling specialty pharmacy from PBM services and considering contracts with closed-door specialty pharmacies as a way to control costs, pharmacy benefit insiders tell DBN.

At the same time, employers are pursuing retail networks that sell a 90-day supply of medication, point-of-sale rebates and more granular formulary strategies to further hone their 2017 strategies and manage a benefit that’s been getting some unfavorable public attention.

“I think 2017 will be a very active year for contracting and price negotiation in the industry,” says Josh Golden, area senior vice president, client development at Arthur J. Gallagher & Co.’s Solid Benefit Guidance consulting arm.

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“Clients are realizing that annual contract housekeeping is needed to keep pace with the financial dynamics of the industry,” Golden tells DBN. “The past year has brought about significant changes in industry economics — the growth of inflation protection [clauses], increasing reliance on patient-assistance funding — and employers are rightfully worried that their contracts are out of sync with the realities of the marketplace.”

In particular, specialty pharmacy management has been moving beyond what Golden calls the “basic blocking and tackling” of prior authorizations and formulary management.

“Our larger clients are now starting to manage specialty holistically across their pharmacy and medical plans, pursuing site-of-care strategies to optimize cost, and balancing their benefit designs to ensure proper alignment,” he says. “And more progressive plan sponsors are exploring drug-specific specialty copays, specifically tailored to capitalize on patient-assistance funding that’s available from manufacturers.”

Sunday, January 15, 2017

Pharmacy Benefit Manager disclosure law preempted by federal benefits law, the U.S. Court of Appeals for the Eighth Circuit ruled

PBM disclosure is earned not given.
Click to learn more.
The 2014 law forces pharmacy benefit managers to disclose pricing methodology to Iowa’s insurance commissioner and to allow pharmacies to comment on and appeal pricing decisions. The Eighth Circuit on Jan. 11 found this law to be unenforceable as preempted by the Employee Retirement Income Security Act because it interferes with the uniform administration of ERISA plans nationwide.

The Pharmaceutical Care Management Association, the PBM industry association that challenged the law in court, called the decision a “shot across the bow” for other states that might be considering adopting similar laws.

The decision “sends an important signal that states can’t impose a patchwork of costly mandates on employers and unions that offer pharmacy benefits,” Mark Merritt, president and chief executive officer of PCMA, said in a Jan. 11 statement.

The National Community Pharmacists Association—which in 2016 filed a brief urging the Eighth Circuit to uphold the Iowa law—said in a statement that it was “deeply disappointed” with the ruling. NCPA CEO B. Douglas Hoey vowed to continue supporting policies like Iowa’s, which he praised as an attempt to “bring transparency to a PBM industry that has exploited secrecy to reap record profits at the expense of hardworking Americans.

In striking the law, the Eighth Circuit said that forcing PBMs to report data to state officials about their role in administering ERISA plan benefits runs counter to Congress’ goal of national uniformity in the administration of employee benefit plans. The Eighth Circuit relied on a recent U.S. Supreme Court decision using ERISA to partly invalidate a Vermont program that collected health claims data.

Continue Reading  >>

Thursday, January 12, 2017

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 150

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, January 10, 2017

The Future of Employer-Sponsored Coverage

It is early days. No one knows what will happen legislatively in 2017. But large employers are as anxious as all health care stakeholders about what the new brand of change may bring. There is high uncertainty given the volatility of the political and policy process that is unfolding and given the unpredictability of the Trump administration.

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What are employers worried about? Here are a few issues to watch:

Tax-deductibility of employer-sponsored health insurance: This has to be the No. 1 and immediate issue. Currently, this is worth $260 billion per annum in tax benefits. If it were to be chipped away at, either in the form of the current law’s planned reinstatement of the Cadillac tax or some Republican proposals to scale back deductibility, this will have a significant negative effect on employers.

Pharmaceutical costs: Rising drug costs are a huge issue for employers and indeed for almost every health care stakeholder I work with. In most commercial health insurance plans (including self-insured plans), per-member, per-month drug costs now exceed inpatient hospital costs. The shift to specialty pharmaceuticals and price gouging, even on generics, is taking its toll. At a recent PBGH or Pacific Business Group on Health board retreat, the top issue raised by all participants was specialty pharmacy, not only because of the salience of the cost (explaining perhaps a full quarter of the increase in trend) but because the private sector options to control pharmaceutical costs are minimal. Trump recognized the drug cost issue in his campaign, but after he won the election, his website no longer speaks of controlling prices of drugs. Instead, there are visionary statements about innovation. Pharma may be getting a pass, as evidenced by the easy passage of the 21st Century Cures Act. But for employers, this issue is not going away. 

Friday, January 6, 2017

"Don't Miss" webinar Tuesday January 10 at 2PM ET

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

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

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

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


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


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

Thursday, January 5, 2017

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 149

This document is updated weekly, but why is it important?  Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs and MCOs pursuant to health care reform. 

The costs shared here are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.



How to Determine if Your Company [or Client] is Overpaying

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.

Wednesday, January 4, 2017

Pharmacy benefit managers could be in legislative crosshairs

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While Congress has taken drug executives to task with high-profile committee investigations of price increases on everything from HIV medication to EpiPens, a crucial link in the drug-price chain has gone largely unscathed: pharmacy benefit managers, who play an obscure by significant role in determining the cost paid for prescription drugs by tens of millions of Americans.

But as the new Republican Congress once again takes on the task of overhauling the U.S. health care system, the relative anonymity of PBMs might be about to come to an end.

As PBMs have grown in size, they have begun attracting an increasing amount of controversy over their how much savings they actually produce, which could make them a target for state legislatures and as part of any repeal of the 2010 health care law.