Thursday, August 31, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 182)

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, August 30, 2017

Implementing Reference Pricing Led to Changes in Drug Selection, Lower Spending

FIGURE 1: Basic supply chain example from manufacturer to consumer
A reference pricing initiative was linked to more prescription fills of lowest-priced drugs and a decreased average price per prescription, but higher rates of copayments by patients, a new study finds.

Reference pricing is a price control mechanism where an insurer or employer specifies the highest amount it will contribute towards paying for a drug or service, leaving patients to pay the additional cost if they choose an option priced higher than that benchmark. A recent study published in the New England Journal of Medicine examined the results of a reference pricing program implemented by the healthcare purchasing organization RETA Trust in 2013.

The program set the trust’s maximum drug payment for 1302 drugs in 78 classes at the price of the least expensive drug in each category. Unless an exemption was granted for clinical reasons, patients choosing a drug that was not the least costly would have to pay the difference in price.

Using pharmacy claims from 2010 to 2014, researchers analyzed changes in drug selection and expenditures after the implementation of reference pricing for the 17,500 employees covered by the RETA Trust. Members of a labor union which did not use reference pricing served as a comparison group to control for market trends.

Analyses indicated that more prescriptions were written for the lowest-priced drug in each therapeutic class for members of the RETA Trust after reference pricing was instituted. Specifically, the share of such prescriptions increased from 59.5% in July 2010 to 69.7% during the first quarter after reference pricing was implemented in July 2013. Over this time, the share of prescriptions written for the least costly drug among the labor union members did not change.

Tyrone's comment: Reference pricing is a great first step. The article doesn't mention it but I'm curious to know how the final cost [for the lowest priced drug in each category] to the labor union was determined. The point I'm making is even with an effective tool such as reference pricing to aid in price control there is still quite a bit of price uncertainty. AWP minus, AAC plus and WAC + all have different cost implications on both sides of the claim. I often play devils advocate so I'm happy to see the reference pricing strategy implemented with such a large organization. Assessing transparency will be more effectively done by a trained eye with personal knowledge of the purchaser’s benefit and disclosure goals. My hope is that the RETA Trust will continue to eliminate waste whilst not negatively impacting its members' healthcare outcomes.     

Researchers also determined that reference pricing had an effect on the RETA Trust’s expenditures. Before reference pricing, the trust paid around 10.6% more per prescription than the union, but after the change it paid prices that were 13.9% lower than those paid by the union, equivalent to a $9.24 lower average price per monthly prescription. Extrapolated to the total number of prescriptions filled in the 18 months after implementation, the RETA Trust saved $1.34 million in this time.

[Read More]

Monday, August 28, 2017

Here's how a non-fiduciary PBM controls information and pricing

Click to Learn More
In the middle of the EpiPen news cycle, CNBC interviewed Steve Miller, the chief medical officer of Express Scripts. "If she wanted to lower the price tomorrow she could," Miller said of Mylan's CEO, Heather Bresch. He continued (emphasis added):"We love transparency for our patients. Our patients should know exactly what they're going to pay when they go to the pharmacy counter. We love transparency for our clients — they can come in. They can audit their contracts. They know exactly what they're going to be required to pay ... What we don't want is transparency for our competitors."

Did you catch that?

Express Scripts will tell clients how much they should pay, but it is trying hard not to tell anyone how much things cost. The problem is that when people find out, they seem to get very angry.

Tyrone's comment: There are two important take aways from the point made above. First, plan sponsors and their agents are not getting enough information to make sound business decisions. Second, once an appropriate amount of information is gathered these same stakeholders must be able to adeptly interpret it. The problem here is most plan sponsors don't know what they don't know. One solution, become an expert steward of the pharmacy benefit

Pharmaceutical-benefit managers started simply enough. In the 1960s, they served a need. As more Americans started taking prescription drugs, insurance companies were overwhelmed processing claims. PBMs offered to do it for them. PBMs pioneered plastic prescription cards and mail-order drug delivery.

They promised Americans they'd negotiate to keep drug prices down. They promised insurers they'd make processing prescriptions a lot cheaper and easier. And they promised drug companies they would favor certain drugs in exchange for rebates and price breaks.

They're paid fees by the insurers and employers who use their services. But they're also taking a cut of every sale. That alone isn't a problem. American business is full of middlemen, and nothing the PBMs do is illegal.

But where the PBMs are starting to get into trouble is that they're making bundles by keeping each player they deal with — pharmacies, insurers, drugmakers — partly in the dark. And those bundles, you could argue, are coming at the expense of the people who pay for healthcare.

Here's how a PBM like Express Scripts controls information and pricing.

Let's say a doctor prescribes you a heartburn drug. Its list price is $300, but the only people who pay that are those without insurance. Because you have insurance, you go to your local pharmacy and pay a $20 co-pay. For you, that's it. Your insurer might be paying $180 for the drug as part of a large-scale agreement it came to years ago via the PBM. The pharmacy that dispenses it may get only $160 for it. That $20 difference is a spread, and that goes to your PBM as profit. That's on top of fees your insurer is paying the PBM to administer its prescription-drug program.

That's the simplest way this goes down.

All the while, the pharmacy has no idea how much your insurer is paying for the drug, and your insurer isn't exactly sure how much the pharmacy is getting for dispensing the medicine. The drug company, meanwhile, isn't even getting close to the $300 list price that makes everyone so angry.

Then things get really murky.

If the price of the drug has increased, the PBM can be paid a rebate for the excess, which it pockets. The insurer, which is paying for the drug, won't know. "These rebate amounts are less likely to be explicitly shared with a client," analysts at AllianceBernstein, an investment firm, wrote in a recent note on Express Scripts.

[Read More]

Friday, August 25, 2017

Take the Generic, Patients Are Told. Until They Are Not.

Click to Enlarge
It’s standard advice for consumers: If you are prescribed a medicine, always ask if there is a cheaper generic.

Nathan Taylor, a 3-D animator who lives outside Houston, has tried to do that with all his medications. But when he fills his monthly prescription for Adderall XR to treat his attention-deficit disorder, his insurance company refuses to cover the generic. Instead, he must make a co-payment of $90 a month for the brand-name version. By comparison, he pays $10 or less each month for the five generic medications he also takes.

“It just befuddles me that they would do that,” said Mr. Taylor, 41. A spokesman for his insurer, Humana, did not respond to multiple emails and phone calls requesting comment. With each visit to the pharmacy, Mr. Taylor enters the upside-down world of prescription drugs, where conventional wisdom about how to lower drug costs is often wrong.

Out of public view, corporations are cutting deals that give consumers little choice but to buy brand-name drugs — and sometimes pay more at the pharmacy counter than they would for generics.

The practice is not easy to track, and has been going on sporadically for years. But several clues suggest it is becoming more common.

Tyrone's comment: The next time you run a claims analysis (re-pricing) here is what I want you to do before deciding which PBM to go with - assuming cost and transparency are important factors in your selection process. Take a look at the contract and based upon the language in said contract ask yourself which vendors' numbers are most likely to hold up? I don't care what your title is Benefits Director, Corporate Attorney or CFO if you're not an expert in the PBM space, far beyond our functional role, find someone else to interpret the information. Finally, be wary of anyone who claims to have it all figured out. This [pharmacy and pharmacy benefits] has been my obsession now for 15 years and still rarely a day goes by when I don't learn something new.

In recent months, some insurers and benefit managers have insisted that patients forgo generics and buy brand-name drugs such as the cholesterol treatment Zetia, the stroke-prevention drug Aggrenox and the pain-relieving gel Voltaren, along with about a dozen others, according to memos and prescription drug claims that pharmacies shared with ProPublica and The New York Times.

Dr. Lawrence Diller, a behavioral pediatrician in Walnut Creek, Calif., said he began noticing “very odd things” going on with Adderall XR and other attention-deficit drugs about two years ago. He began receiving faxes from pharmacies telling him that he had to specify that patients required brand-name versions of the drugs.

He had been practicing for 40 years, but until then had never had a pharmacy tell him that he had to prescribe a brand-name drug instead of a generic.

[Read More]

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

Thursday, August 24, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 181)

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, August 21, 2017

New Website Launches to Educate About DIR Fees

Courtesy of National Community Pharmacists Association
The National Association of Specialty Pharmacy (NASP) launched www.stopdirfees.com, which is a site that underscores how direct and indirect remuneration (DIR) fees affect independent pharmacies—especially those in the specialty space—and Medicare patients.

DIR fees have been said to increase drug costs for seniors insured through Medicare Part D, while also threatening the profitability of specialty pharmacies who provide treatment to patients with complex diseases.

Big pharmacy benefit management (PBMs) firms have worked hard to make DIR fees so complicated and opaque that very few people understand how they impact sick seniors enrolled in Medicare,” Sheila Arquette, executive director of NASP, said in a press release.

Thursday, August 17, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 180)

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, August 15, 2017

Express Scripts' profit grows despite dwindling revenue from Anthem

Express Scripts said in May that Anthem, which sued the company last year for allegedly not passing along billions of dollars in savings from negotiated drug prices, will likely not renew its contract come 2019. PBMs, which process drug claims and negotiate drug discounts with pharmaceutical companies on behalf of payers, have been criticized for operating under the veil of nondisclosure agreements and a general lack of transparency throughout the pricing process. 

"If we do enter into a new contract with Anthem, it would be on terms significantly less favorable to us than our current contract," the company said in Securities and Exchange Commission filings. 

Express Scripts' network pharmacy revenue decreased $691.2 million on the quarter, or 5%, primarily due to filling more generic prescription claims. However, home delivery and specialty revenue increased $544 million, or 5%, primarily due to ballooning prices on branded drugs and a higher proportion of specialty claims, which have been the drivers of double-digit increases in pharmaceutical spending. The company made a profit of $5.21, including interest, taxes, depreciation and amortization, for every processed claim in the second quarter, up from $5.15 last year. 

Generally, filling more generic prescriptions reduces PBM revenue, as generics are typically cheaper than branded alternatives. But since ingredient costs paid to pharmacies on generics is lower than the price charged to clients, filling more generic prescriptions bolsters gross profit, the company said in regulatory filings. 

Tyrone's comment: So Express Scripts admits to spread-taking yet most plan sponsors and their advisers believe themselves to have entered a pass-through services agreement which prevents spreads. The truth is non-fiduciary PBMs have gotten smarter about where to hide these revenues.

Analysts expect Express Scripts to benefit from increased use of generics, a shift toward mail orders and significant growth in specialty and branded drugs. 

[Source]

Friday, August 11, 2017

Lawsuit against CVS could blow up what you thought you knew about drug prices

What if paying for a drug with insurance didn't cost you less, but made the drug more expensive That's what a new lawsuit filed against CVS is alleging. The suit claims that the pharmacy agrees with pharmacy benefit managers, or PBMs to sell certain drugs at a higher price if a customer is paying with insurance.

The suit also alleges that CVS pharmacies charge customers a "co-pay" that's instead additional money CVS shares with the PBM. It works like this, according to the complaint:

Click to Learn More
The lead plaintiff in the case is a woman named Megan Schultz, and she claims that she bought a generic medication at CVS that cost $165.68 under her insurance but would've cost only $92 had she paid in cash without using her insurance.

Here's why, according to the complaint:

The PBMs can control which pharmacies are "in network" for their clients, the insurers.
Since CVS pharmacies want those sales from in-network patients, they offer the PBMs a cut of the drugs they're selling to those insured patients. What's more, Schultz says she had to find this out on her own because no one at CVS could legally give her a heads-up. From the complaint:

Thursday, August 10, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 179)

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, August 7, 2017

What's your PBM IQ? Test your pharmacy benefits competency.

Become a pharmacy benefits expert; click to learn more
Teachers, military personnel, doctors, pharmacists and even some professional athletes are tested for competency specific to their job functions. Yet, in an industry where over $400 billion changes hands annually the folks making purchasing decisions don't have to prove competency specific to pharmacy benefits management. It's really quite simple, PBM competency (mastery) = lower costs = better patient outcomes.

What's your PBM IQ? Take our quiz to find out.
(no personal information is required)


Click to Learn More
Expand your PBM knowledge beyond a functional role and understand exactly how each domain works together within the pharmacy distribution and reimbursement system. Education is the most logical and effective foundation for achieving maximum value in pharmacy benefit management (PBM) services. Assessing transparency will be more effectively done by a trained eye.

Thursday, August 3, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 178)

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, August 1, 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.