Thursday, May 24, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 220)

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, May 23, 2018

Trump’s Drug Blueprint Could Alter PBM Contracting

Click to Learn More
With much fanfare, President Donald Trump's administration recently released a 44-page blueprint for executive action on drug pricing titled American Patients First. The blueprint proposes steps to end drug manufacturers' "gaming" of the regulatory process and to create incentives for pharmaceutical companies to lower list prices. The proposals regarding pharmacy benefit manager (PBM) firms, in particular, could affect drug costs covered by employer-sponsored group health plans.

The blueprint, however, also asks whether PBMs should be obligated to act solely in the interest of those for whom they manage drug benefits. If PBMs were identified as plan fiduciaries, they would be accountable for negotiating in the best interest of the plan and its members. This could certainly change the dynamics of current PBM relationships and, if adopted, keep PBMs from accepting certain types of payments from manufacturers that favor coverage of higher-cost drugs.

Tyrone's Commentary:

For all intents and purposes, there are only two types of PBM business models; non-fiduciary and fiduciary. Don't be fooled by labels such as pass-through, transparent, limited fiduciary (a new one) or others. I'm often asked what's the difference between a transparent and fiduciary PBM. Here is the big difference. A fiduciary PBM is required to act in its clients' best interest first for every action it takes on behalf of that client. In other words, the fiduciary PBM is contractually obligated to contain its clients cost. Any other PBM model regardless of what they tell you is not contractually obligated to contain costs. They are intentionally trying to avoid this responsibility so don't let them off the hook!

[Read More]

Friday, May 18, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 219)

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, May 15, 2018

Appellate court kills Optum's $6.7B pharmacy benefits management contract; orders rebid

Click to Learn More
An appellate court has determined OptumRx's bid did not conform to the bid solicitation, because it included language reserving the right to modify the financial terms of the deal to protect its profit if the state made changes to the plan design.

"Optum's additional language ... permitted it to 'hedge' its bid, thereby reducing its financial risk from adverse plan design changes," the court said. "That set it apart from the other bidders who agreed to be bound by all of the terms of the bid solicitation."

Tyrone's Commentary:

I here it all the time from purchasers of PBM services; control the formulary, go for low net cost, not high rebates, work with a transparent PBM, or make sure the consulting firm isn't being comped. Everyone knows these things are important, but the execution is usually poor. Furthermore, if the self-insured employer and its consultant aren't informed or highly sophisticated it can lead to bad contract language that isn't consistent with bid responses or permits the PBM to modify terms during the contract's life, for instance. There are three parts to being an adept steward of a pharmacy benefit and they are not mutually exclusive. In other words, if you're poor in any one of these areas it will hurt you in the other two.

1) Education. If only I had a nickle every time a consultant or HR executive said I don't need any PBM education. That's like LeBron James saying I don't need to practice playing basketball. He's the best in the world yet he still studies the game more than any other player! You may attend a webinar or two, read a blog post or chat with peers and I can tell you it still isn't enough to beat non-fiduciary PBMs at their own game. Invest more time and money into becoming a better steward of pharmacy benefits. Incrementalism in this area will not be rewarded. The best proponent of transparency is informed and sophisticated purchasers of PBM services.

2) Procurement. Means the action of obtaining or procuring something. When obtaining PBM services, ideally it involves a reverse auction. The state of New Jersey ran a reverse auction but somehow Optum's bid still squeeked through. My guess is that human interference got in the way, as it often does, with the real bid winner or the reverse auction was inherently flawed. Because one takes action on a problem doesn't guarantee an optimal outcome. You can swing (act) at a 95 mph fastball but will miss (outcome) 99 out of a 100 times unless of course you're a well-trained professional and student of the game. There are a lot of companies and consultants that procure PBM services who are missing a lot! One problem is a lack of accountability unlike standing in the batters box alone. It would be nice if self-insured employers had a stopgap like an appellate court to fall back on. Oh wait they do and they're called benefits consultants.  
  
3) Vigorous Oversight. PBM performance should be monitored on an ongoing basis far beyond standard reports. The types of routine monitoring activities performed by the plan sponsor can vary based on past performance with the PBM or the nature of the services performed. The type and frequency of monitoring should be documented in the contract before it is executed. The plan sponsor should establish key performance metrics designed to measure PBM services. The PBM oversight program must also define what happens if the vendor’s performance is below the plan sponsor’s performance expectations. When noncompliant performance occurs, the plan sponsor should request a formal action plan defining specific activities to ensure performance meets the defined expectations. 

The state, meanwhile, argued Optum's language was meaningless and didn't affect the outcome of the auction. The three-person court invalidated the contract, saying its size, complexity and potential savings for the public aren't a shield from this type of review.

"No savings can justify the impairment to the integrity of the bidding process caused by an irregular proceeding, the court said.

[Read More]

Monday, May 14, 2018

From $14000 to $8000 Overnight with Almost No Restrictions; Cholesterol Drug has Potential to Break Self-Insured Employers' Bank

Amgen’s Repatha and Sanofi and Regeneron’s Praluent were approved in 2015 with blockbuster expectations. But the number of patients with high cholesterol and the $14,000 a year price tag of the drugs prompted heavy restrictions from PBMs.

In an attempt to juice sales, Sanofi and Regeneron substantially cut their drug’s net price for Express Scripts so it would reduce those restrictions. Back-slapping followed. But this is just a louder and bigger version of something that happens all of the time: an exchange of a bigger rebate for more favorable coverage.

Tyrone's Commentary:

At first glance the drop in price appears to be a positive move and it could very well turn out that way. However, self-funded employers have to keep a keen eye on utilization. Express Scripts will remove almost all restrictions on the medicine and make it cheaper for patients, for instance. Plan sponsors need to understand the manufacturer-side revenue ESI is generating for itself and its affect on final plan cost. Furthermore, consider implementing your own step therapy or PA processes. Robust oversight on PBM performance is standing operating procedure, but especially important for expensive medications.

If demand increases, Express Scripts benefits from a handsome rebate, and rising drug costs will largely flow through to clients. The list price is staying the same, and the majority of consumers will still be exposed. A few more patients will get Praluent, which is a genuinely good thing. And a pantomime of a dialogue about lower list prices is better than nothing. But at the end of the day, nothing really changes.

[Read More]

Thursday, May 10, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 218)

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, May 7, 2018

Longtime chief of pharmacy benefit manager trade group to step down

Click to Learn More
Mark Merritt, president and chief executive officer of the Pharmaceutical Care Management Association, will step aside at the end of the year, after 15 years on the job, the trade group announced Monday morning. The news of Merritt's departure comes as pharmacy benefit managers (PBM), which PCMA represents, feel increasing pressure from the government and private industry alike.

1) Government pressure: Health and Human Services Secretary Alex Azar and Food and Drug Administration Commissioner Scott Gottlieb, MD, have each delivered incisive speeches with strong words directed at health plans and PBMs, criticizing a lack of transparency around their drug pricing and rebating contracts.

Tyrone's Commentary:  The winds of change have begun to blow.

2) Industry pressure: While PBMs are pushed by the government on one front, they're fighting a second front with private industry, enduring criticism from the pharmaceutical industry and a series of major mergers with insurers. St. Louis–based insurer Cigna announced plans in March to buy Express Scripts for about $52 billion, after CVS Health announced plans in December to buy insurer Aetna.

Thursday, May 3, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 217)

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, May 2, 2018

ESI Reachs Deal on Struggling Cholesterol Drug with a List Price Over $8000

Image result for praluent copay cardDrugmakers Regeneron and Sanofi are cutting the price they charge pharmacy benefit manager Express Scripts for their cholesterol medicine, Praluent. In return, Express Scripts will remove almost all restrictions on the medicine, and make it cheaper for patients. In theory, that should mean a sales boost.

“I really hope this works because otherwise it's a bad message for everyone going forward,” says Steve Miller, Express Scripts’ chief medical officer. Why? Miller says that Praluent was hurt by a high price (list: $14,000 a year), and a lack of proof that it helped patients. But now, Miller says, things have changed.

Tuesday, May 1, 2018

"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

"...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. maximum allowable cost (MAC)
  • 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, April 30, 2018

Therapeutic Interchange: How It Could Affect Patients and Plan Sponsors

Earlier this month CVS Health stated that it is using various tools to help keep the inflationary cost of medication down to 0.2%. One of their methodologies that is mentioned at face value sounds rather benign, but according to Jon Roberts, executive vice president and chief operating officer, CVS Health.

“The lower cost growth was due in part to utilizing low-cost generic drugs, which were dispensed to 86% of pharmacy benefit management (PBM) clients.” In other words, 17 out of 20 patients were moved to generics. The term “therapeutic alternatives” means that CVS will be (somehow) getting patients to use a less expensive medication within a therapeutic category.
Source:  http://www.amcp.org

Tyrone's Commentary:

The author seems to miss at least part of the point. It's not just CVS Health who benefits from lower cost therapeutic alternatives; plan sponsors and patients may also benefit. He points out an extreme case and that's exactly what it is - extreme! If you don't care for CVS Health write that but don't deter patients from medications with equal efficacy yet lower cost. The AMCP agrees so I think I'll go with them. I do, however, agree plan sponsors have a responsibility to keep PBMs honest in any therapeutic substitution program.

To use an extreme example of how this could play out: let’s take blood thinners, within that class are “new oral anticoagulants” which includes Paradaxa, Xarelto, Eliquis. These medications each costs several hundred dollars per month. The “old” generic anti-coagulant is Warfarin which typically costs a patient as little as $4.00/month.

[Read More]

Thursday, April 26, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 216)

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, April 25, 2018

The role of PBMs in the drug supply chain — and why it matters to employers

Most employers don’t understand how PBMs make money and what role they play in the drug supply chain. The fact is these “middlemen” can drive up pharmacy costs. Historically, PBMs have two main goals:

1. Negotiate drug prices in an effort to keep costs low for consumers and employers.

2. Favor the most effective drug where there are similar drugs treating the same condition.

But PBMs also have a third goal: to make money for their owners and shareholders. Arguably this goal overrides the other two. Many industry watchers — and members of the public — are wondering if PBMs provide much value other than skimming as much profit from the drug supply chain as possible.

[Read More]

Thursday, April 19, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 215)

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, April 17, 2018

Amazon About-Face On Drug Sales Not Surprising To Walgreens And CVS

News Amazon is backing away from an effort to sell drugs to hospitals doesn't come as a surprise to retail drugstore chains Walgreens Boots Alliance, CVS Health and distributors in the specialty pharmacy business.

CNBC reported Monday that the online retailer Amazon has “shelved a plan to sell drugs to hospitals” citing “complexities around selling in bulk to large hospitals and building a logistics network to handle pharma delivery.”

Tyrone's Commentary:

Amazon is bailing on selling prescription drugs due to complexities associated with the drug supply chain? I don't know if it's true, but the statement illustrates just how complex the U.S. pharmacy reimbursement and distribution system is for even the smartest companies. Amazon bails and you think you can manage pharmacy benefits efficiently by reading a blog post or watching a webinar or two? Don't kid yourself. 

But it’s not like CVS and Walgreens didn’t warn of the complexities of getting into the business of selling and processing prescription drugs, particularly specialty prescriptions shipped to hospitals and clinics.  “There are many barriers to entry when you’re looking at pharmacy,” CVS CEO Larry Merlo said in August of last year during a call with analysts.

[Read More]

Monday, April 16, 2018

The Price of Non-Optimized Medication Therapy

Source:  Impact of medication adherence on
hospitalization risk and healthcare cost
Although rising prescription drug prices cause a financial burden, the cost often extends beyond the number that patients see on their bill, according to a recent analysis published in the Annals of Pharmacotherapy. When medication regimens are not appropriately optimized for the patient, the consequences can carry a hefty price tag.

According to the analysis, death and illness resulting from non-optimized medication therapy costs $528.4 billion annually, which is equivalent to 16% of total US health care expenditures in 2016. As the most readily available access point for most patients, pharmacists can play a key role in ensuring that medication therapies are optimized to help produce the best outcomes at the lowest cost.

Tyrone's Commentary:

No plan design is complete without a comprehensive medication adherence program. Key components of an employer plan to improve medication adherence include: 
  • Employee coaching and support teams 
  • Financial incentives to encourage medication adherence
  • Ensuring that the most appropriate medications are prescribed
  • Prescription management to avoid interactions and other dangers
The study was led by Jonathan Watanabe, PharmD, PhD, associate professor of clinical pharmacy in the Skaggs School of Pharmacy, with Jan Hirsch, PhD, professor of clinical pharmacy and chair of the Division of Clinical Pharmacy at Skaggs School of Pharmacy, and Terry McInnis, MD, of Laboratory Corporation of America and the Get the Medications Right Institute.

[Read More]

Thursday, April 12, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 214)

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, April 10, 2018

Two Generic Medications Become One Cash Cow Drug

Source:  Consumer Reports
For at least the past three years, Todd Smith and Benjamin Bove have crisscrossed the U.S., offering a sure-fire fix for struggling pharmaceutical companies. And wherever they go, the price of prescription drugs tends to skyrocket.

Their strategy is simple and, they say, good for patients: Thwart efforts by health plans to block access to drugs - and serve up what Smith calls their "special sauce" to get those meds into the hands of customers who need them.

The main ingredients include copays that are often zero, even for pricey drugs. Smith, 48, and Bove, 40, also offer the use of so-called specialty pharmacies - one of which they previously owned - to make it hassle-free for doctors and more affordable for patients. Yet critics point out that, over time, everyone might end up paying the price in the form of higher premiums. 

"It's totally a wrong way to frame the issue to say it's free to the patient," said Stephen Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota. "It's ripping people off."

Tyrone's commentary:

Implement a PBM oversight plan. PBM performance should be monitored on an ongoing basis with a formal business review no less than annually. The types of routine monitoring activities performed by the plan sponsor can vary based on past performance with the PBM or the nature of the services performed. The type and frequency of monitoring should be documented in the contract before it is executed.

The plan sponsor should establish key performance metrics designed to measure the PBM's services. For example, if the plan sponsor delegates call center operations to a PBM, then the performance metrics should include, at a minimum, hold time, average speed of answer and abandoned rate.

The PBM oversight program must also define what happens if the vendor’s performance is below the plan sponsor’s performance expectations. When noncompliant performance occurs, the plan sponsor should request a formal action plan defining specific activities to ensure performance meets the defined expectations. Depending upon the severity of performance, the plan sponsor should consider increasing monitoring and audit activities of the PBM.


If nothing else, Smith and Bove's business strategy illustrates a drug-pricing ecosystem that many agree is deeply flawed. President Donald Trump has accused drug companies of "getting away with murder," and his Health and Human Services Secretary, Alex Azar, has vowed to bring drug prices down. Yet the system is averse to change because so many of its key players continue to profit from its complexity and lack of transparency. Patients, meanwhile, are faced with fewer choices and higher deductibles and insurance premiums.

"These sophisticated traps are designed to pay off certain members of the supply chain in a way that exploits the employer, the insurance company and the consumer," said Michael Rea, chief executive officer of Rx Savings Solutions, which has an app that allows patients to find lower drug costs.

[Read More]

Sunday, April 8, 2018

"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

"...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. maximum allowable cost (MAC)
  • 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.

Friday, April 6, 2018

When left to their own accord, non-fiduciary PBMs will act in their own self-interest

Yesterday an article appeared in my bi-weekly newsletter which outlined how non-fiduciary PBMs make money in the back-end through a little known hidden cash flow tactic called back-billing. The article must have hit a nerve because I received quite a bit of feedback. One email I received in particular stood out. I'll get to that later.

A couple of days ago I spent an hour talking with a seasoned consultant about how guaranteed AWP discounts aren't in their clients best interest. Sure, guaranteed discounts are better than nothing but even better are plan sponsors paying actual pharmacy reimbursement (APR) which in turn makes AWP discounts ineffectual. He didn't buy it!

Unsolicited email depicting back-billing case (click to enlarge)
Take a look at what Caterpillar Inc. is doing particularly the part about "it decided to determine its own pricing methodologies in contracts rather than using PBM-negotiated drug prices." Discounts off AWP are a distraction used by non-fiduciary PBMs to perpetuate the opacity in their dealings. Caterpillar learned this a decade ago and is likely using a pricing methodology closely resembling APR.

Because it is shifting costs or service fees to the back-end, a non-fiduciary PBM will often come in at a lower price on the front-end (claims repricing and adjudication). I know what you're thinking - sour grapes. Trust me it's not I just don't like to see people taken advantage of. But, if I try to help and you ignore it then you know how the saying goes, "fool me once..."

This brings me to the point of this post and I'm quoting a peer Lisa Gish who wrote to me recently, "can't seem to shake my displeasure with the lack of forward thinking consultants who are absolutely stuck in old mindsets and tactics." Nuff said now about that email I received.

Thursday, April 5, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 213)

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, April 4, 2018

Newer Specialty Drugs Require Payers to Revise Coverage Strategies

The groundbreaking approval of 3 CAR T cell therapies in 2017 has not only opened up the possibility of cures for patients, but also sent shockwaves through the payer community, which is responsible for a large chunk of the costs. The launch cost of hundreds of thousands of dollars plus spending on monitoring and hospitalization, it is clear that payers must revisit their traditional formulary approach.

2017 Launch Forecast for Specialty Drugs (source: Diplomat Specialty Pharmacy)
Biosimilars have also complicated formulary decisions. Payers must now compare the safety and efficacy of these products to reference drugs to determine how to meet patient needs, while also controlling costs.

In part 1 of a 2-part interview with Specialty Pharmacy Times, Steve Johnson, assistant vice president, Health Outcomes, Prime Therapeutics, discussed how newer specialty drugs have resulted in the need for new coverage strategies.

SPT: What are some important things for payers to know about CAR T cell therapies?
Johnson: First and foremost, these are obviously very complex therapies that we say are truly innovative, offering potential cures for very difficult diseases and conditions. These therapies aren’t limited to prescribed drugs, rather they often require hospitalizations.

[Read More]

Tuesday, April 3, 2018

Standing pat can't be a long-term strategy for self-insured employers

The smirk from a non-fiduciary PBM salesperson
after closing a deal with an unsophisticated employer
One of the biggest mysteries within a non-fiduciary PBM's contract are the algorithms that determines whether a drug is a brand or a generic. Here is an example of how the algorithm could be used at the smallest scale.

How it works:
  • Imagine a generic drug has an average sticker price of $100, and its cost (including money for the drug maker, wholesaler and pharmacy) is $15.
  • The PBM says it will apply an 80% discount on generic drugs, meaning an employer should only pay $20 for the drug. The PBM pockets $5 on normal spread pricing (after subtracting the $15 cost).
  • However, using the algorithm, the PBM could define the generic drug as a brand, which only commands a 17% discount.
  • Under that scenario, an employer would pay $83, or more than four times what it should for the generic, and the PBM pockets $68 after subtracting the drug's cost.
  • Multiply this strategy for millions of generic prescriptions, and the profits add up quickly.
Tyrone's Commentary:

Within a PBM service agreement, the definitions usually start on pages one or two. Not coincidentally, this is also when the games [self-dealing] begin and some of the largest companies in the world fall for it. Just because you can make smart phones, build cars or design software doesn't necessarily mean you are good at managing pharmacy benefits. Take ego out of it here are three no-no's:
  1. Don't allow the definitions for important terms such as generic, brand and specialty drugs to be defined by non-fiduciary PBMs. Create a template in-house for important contract definitions and demand they replace ambiguous definitions in your PBM contract. 
  2. Don't count on in-house lawyers to eliminate contract loopholes. There is nothing illegal about the contracts non-fiduciary PBMs present to their clients. Subsequently, some of the largest companies in the world (see Anthem vs. Express Scripts) think they are protected because they have in-house and outside attorneys vetting these contracts and that simply is not necessarily the case.
  3. Don't hire or retain any adviser who doesn't protect you from points one and two above.
The thing is, assessing transparency is more effectively done by a trained eye. Someone who knows the ins and outs of PBM revenue models, contract loopholes and has personal knowledge of the self-insured employer's plan goals.

[Read More]

Friday, March 30, 2018

What's your decision flow process?

As a fiduciary-model PBM, free education is a core part of TransparentRx's strategy. Think about it, we win when clients are educated and our competitors or non-fiduciary PBMs win when clients are illiterate. 

I'm often asked, "why do you give away valuable information for free? Aren't you just shooting yourself in the foot? 

The answer is no; watch the video to learn why. HINT: A lot of people watch Bruce Lee movies but that doesn't mean...By the way, I took this clip from my favorite televison show Billions.


If you have to ask what's the difference between a fiduciary-model PBM and a transparent PBM then for all intents and purposes you are illiterate. Non-fiduciary PBMs generate the bulk of their free cash flow from uneducated purchasers. Don't be a stock jockey or better yet don't hire one! Learn the ins and outs of managing pharmacy benefits.

Thursday, March 29, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 212)

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, March 28, 2018

Clinical Reviews | An underused way to save big on pharmacy benefits

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Historically, brokers and consultants have helped employers manage the cost of pharmacy benefits by focusing on negotiating pricing arrangements for drugs through discounts and rebates. As long as pharmacy benefit managers (PBMs) pass through most or all of the rebates and discounts to employers — especially for specialty drugs, which can cost thousands of dollars per script — employers should save a significant amount from retail pricing.

Tyrone's Commentary:

Cost resulting from a claims repricing most often tells only part of the story. Self-insured employers and their consultants must also consider which PBM proposal promises better utilization and product mix. Clinical information, utilization and product mix, is sometimes more important than the repriced claims! Ignore it or not pay it enough attention and the result will be wasteful spending and poor outcomes on both the pharmacy and medical side. 

How would you know which PBM proposal is best? The contract language will tell you which option is best that's how. Don't rely solely or too heavily on repriced claims data it is fools gold. Of course, results will vary based upon the decision-maker's level of industry knowledge and negotiating skills. Sophisticated purchasers who know the ins and outs of PBM revenue models and contract loopholes will fare far better than those who are "picking it up" as they go. 

Even if a self-insured employer wins back all manufacturer dollars (rebates) and eliminates all spread pricing including back-end fees a non-fiduciary PBM could still shift their hidden fees to the clinical side, for example. So while many self-insured employers have their front doors locked, non-fiduciary PBMs are sneaking in through your back and basement doors. Caveat Emptor. 

While this strategy helps save money and should continue to be used, there’s another tremendous opportunity that many employers are leaving on the table: reviewing drug formularies and claims from a clinical perspective. This practice can help plan sponsors determine the lowest net cost for a treatment.

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Tuesday, March 27, 2018

U.S. spending on drugs will grow faster than on other health-care services over the next decade

Image result for prescription drug spending trends
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Drug spending skyrocketed in 2014 and 2015, driven largely by the use of a new generation of curative therapies for hepatitis C. When national health spending data was released showing a 1.3 percent increase in spending on prescription drugs in 2016 — a small fraction of the increases in previous years — a pharmaceutical lobby spokeswoman highlighted the trend as evidence of the “nation's competitive marketplace for medicines.”

Tyrone's Commentary:  Are you learned or have you decided to just "pick it up" along the way? The latter will cost you.

The new analysis suggests the low rate of increase will not last. CMS actuaries said the secret rebates that manufacturers negotiate with health plans have helped temper the growth of prescription drug prices and spending in recent years but will not contribute as much in the future. The prescription drug data does not include drugs administered in physicians' offices or in hospitals.

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Sunday, March 25, 2018

10 Steps to Improving Your Company's Pharmacy Benefit Management Results

Managing the pharmacy benefit efficiently is no easy task. It requires quite a bit of time, effort and skill to do it right. Anyone with business training can look at a P&L statement and determine whether or not a company made a profit. However, understanding the story behind the numbers requires a certain set of skills only a certified public accountant can provide, for example. The same can be said for pharmacy benefits.

Pick anyone from HR, finance or procurement and they will tell you succinctly the pharmacy cost trend is not sustainable. Ask these same professionals how to bend the trend (without increasing employee cost share, restricting access or reducing benefit levels) and you'll likely get crickets. You're probably thinking, that's why we hire brokers and consultants. I'll let the note Michael Critelli, former CEO at Pitney Bowes, sent to me address that point.

"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."

For those interested in improving their company's pharmacy benefit management results and unafraid of unconventional concepts, here are 10 steps in the right direction.

1. Get better educated

“The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.” — Alvin Toffler. Education is the most logical and effective foundation for achieving extraordinary results in pharmacy benefit management services.

In order to improve on the job execution and career growth, benefits consultants, finance managers, procurement and HR professionals must expand their PBM knowledge beyond a functional role and understand exactly how each domain works together within the pharmacy distribution and reimbursement system. Don't be a spendthrift learn the intricacies of managing pharmacy benefits like a pro.

2. Embrace reverse auctions

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I liken manual scoring and paper-based RFPs to typewriters and the Startac cell phone. Each served its purpose but their day of usefulness have long passed us. 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, the request for information (RFI) is a shorter less-structured instrument compared to RFPs. It asks a handful of PBMs to answer some very targeted questions. The responses to those questions should be scored automatically based upon a set of  predetermined criteria. When coupled with an automated reverse auction, the RFI can be a powerful tool in combating high PBM service fees.

PBMs have gotten so good at RFPs that they've just become a marketing tool for the PBM. The contract [language] is the white elephant purchasers seem to ignore or not pay nearly enough attention.

Thursday, March 22, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 211)

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, March 20, 2018

Fiduciary PBMs emerge as response to consolidation of Rx dispensing, concern over conficts of interest and need for deeper clinical expertise

With rising prescription drug costs considered the nation’s fastest-growing component of health care, pressure has been mounting on pharmacy beneft managers (PBMs) to help Corporate America rein in such spending. But at a time when transparency has never been more important across the self-insured community and beyond, a struggle over stewardship is brewing.
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Gary C. Becker, CEO of ScriptSourcing, estimates that less than 2% of the nation’s roughly 300 PBMs operate without conficts of interest. In contrast to a traditional PBM, he says all manufacturer revenue in a “fduciary” PBM contract belongs to the employer – adding “there will be no spread pricing.” Leaders in this nascent feld of expertise include US-Rx CARE, TransparentRx and OrchestraRx, among others.

These market disruptors could help bend the Rx cost curve in ways that self-insured employers never imagined, crow proponents of this model. Becker says it’s analogous to scores of employers transitioning from retail to institutional pricing for their 401(k) investment fees. His point is that employers have an opportunity to mirror these cost savings by working with a fduciary PBM.

Different paths to cost savings

However, employers shouldn’t expect this new way of managing prescription drugs is necessarily a silver bullet. Keith McNeil, co-founder of United Benefts Advisor partner frm Arrow Benefts Group, much prefers the fduciary PBM model, though cautioning it doesn’t automatically mean that such programs save money.

Tyrone's commentary:

Because most purchasers of PBM services are unable to uncover all the hidden cash flows baked into a non-fiduciary PBM arrangement, Keith's statement is a very dangerous one to make. DIR fees, while indirect, are hidden cash flows very few plan sponsors take into consideration, for example. 

Another example, clawbacks, like DIR fees, lead to patients overpaying at the point-of-service with the non-fiduciary PBM pocketing the difference. How many purchasers are truly factoring in these hidden cash flows when forecasting final plan cost? 

My final point; when conducting a side-by-side claims analysis it is a disservice to plan sponsors for brokers and consultants to determine "best price" with only the claims data before them. Instead brokers and consultants must view the data holistically and ask, "WHAT SHOULD THE FINAL PLAN COST FOR THIS GROUP HAVE BEEN?" A claims analysis or re-pricing looks primarily at historical price which is just one driver of pharmacy costs. It doesn't always take into account poor product mix or bad utilization from which non-fiduciary PBMs intentionally profit. 

For the record, a fiduciary-model PBM is prohibited from profiting from poor utilization or product mix. In fact, punitive damages kick in if a fiduciary PBM does profit from these drivers. Hence, the reason most (99%) PBMs don't accept full fiduciary responsibility and those who claim to offer a fiduciary standard provide only a modified version.

Three drivers of pharmacy costs (utilization, product mix and cost share) contribute mightily to wasteful Rx spending, yet are oft-over looked when comparing PBM proposals. I wonder if Keith considered these drivers of pharmacy cost before saying, "a fiduciary-model PBM doesn't necessarily deliver a better price?" I don't know but I will ask him.

Hidden costs

The trouble with traditional PBM contracts is that they abdicate any fduciary responsibility, according to Becker, whose frm helps self-funded employers mitigate prescription drug claims. “Who would ever hire someone to mitigate prescription spend who is not going to act in their clients’ best interests?” he asks rhetorically.

Gary C. Becker, CEO of ScriptSourcing, estimates that less than 2% of the nation’s roughly 300 PBMs operate without conficts of interest. In contrast to a traditional PBM, he says all manufacturer revenue in a “fduciary” PBM contract belongs to the employer – adding “there will be no spread pricing.”

[Click to download full article]

Friday, March 16, 2018

Generic Hepatitis C Drugs Begin to Emerge

zepatier cost vs cost of other hepatitis c treatents
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The cost of hepatitis C virus (HCV) antivirals has been at the forefront of health care spending conversations for years. Although it has slowed, spending on the blockbuster drugs remains high. Despite the curative ability of the treatments, it is likely that a significant need for antiviral drugs will remain into the foreseeable future due to the prevalence of undiagnosed HCV cases.

A recent Vizient Drug Price Forecast outlined the top drivers of specialty pharmacy spending, one of which being HCV. The cost of HCV drugs is projected to increase 2.02% in 2018, which is slower than the past few years due to increasing competition and lower-cost options.

Tyrone's Commentary:

Rebates are not "free money" thus don't justify the higher price tag compared to lower cost Hep C treatments which do not pay rebates. Because it essentially eliminates the PBM mark-up, AbbVie’s pricing strategy for its Hep C drug Mavyret is disruptive to the traditional PBM revenue model, for example. Instead of paying a rebate AbbVie prices it [rebate] back into the list price in the form of a significant list price discount. The same is true of forthcoming biosomilars and the result for plan sponsors is lower plan costs. That is if you don't take the bait or rebate dollars. 

Natco Pharma recently announced it filed an Abbreviated New Drug Application (ANDA) for sofosbuvir tablets, 400-mg, according to a press release.

Sofosbuvir is currently marketed by Gilead Sciences under the brand name Sovaldi. Sofosbuvir was the first blockbuster HCV drug to receive approval in December 2013, shortly followed by Gilead’s ledipasvir/sofosbuvir (Harvoni) in October 2014.

Natco said it is the first to have filed a complete ANDA and expects to receive 180 days of exclusivity after final approval.

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