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]