Tuesday, July 27, 2021

Tip of the Week: Non-Fiduciary PBMs Hedge Against Their Legacy Business Models

Anthem and Humana have invested nearly $140 million to form a new pharmacy benefit manager, as criticism over traditional PBMs’ operations kickstarts business at startups that promise transparency. The new venture comes as more payers begin to question the work of the “Big Three” PBMs.

  • In 2019, Anthem launched in-house PBM IngenioRx, after suing Cigna’s Express Scripts for $15 billion over allegations the company withheld savings and overcharged the insurer.
  • In April, Costco announced it was expanding its partnership with Madison, Wisc.-based Navitus Health Solutions, a PBM owned by SSM Health
  • Ohio announced it was partnering with Tysons, Va.-based Gainwell Technologies to operate its own PBM, which it expects to save the state $240 million in drug costs each year, compared with its former private operators.

Tyrone's Commentary:

Every profession and industry has its bad actors, and ours is no different. Just because the business model of non-fiduciary PBMs has become layer upon layer of self-dealing, it is important to remember that many of our peers are doing good work within the walls of those enterprises as well. In our ongoing effort to push the industry toward radical transparency, we will continue with education as our focal point because we know there are fantastic people within the industry who can help us in our goal to raise the standard of care for purchasers of PBM services. Afterall, education is the key to getting to lowest net cost.

The insurers, Anthem and Cigna, will hold a minority stake in the new joint venture, named DomaniRx, which is being championed by SS&C Technologies. The Windsor, Conn.-based fintech company owns approximately 80% of the new business, according to a filing submitted to the U.S. Securities and Exchange Commission on July 15. 

Humana will serve as DomaniRx’s first customer. The Louisville, Ky.-based insurer currently operates its own PBM. Humana and Anthem hold a non-exclusive license to RxNova SS&C’s existing claims processing platform.

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Thursday, July 22, 2021

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 374)

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.

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.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It's impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.

Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.

-- Tip --

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

Tuesday, July 20, 2021

Tip of the Week: The Specialty Drug Pipeline Will Make You Rethink Your Pharmacy Benefits Management Strategy

Employers should be aware that the new drug pipeline focuses on manufacturer investments in developing high-cost brand, specialty and orphan drugs. With more than 8,000 drugs in development, new drug launches will reach historically high levels over the next several years.

New and potentially lifesaving or life-prolonging therapies are reviewed and approved every year, but generally there are two drug pipelines to monitor: novel drugs coming to the market for the first time for any indication, and new indications for existing medications already approved by the U.S. Food and Drug Administration (FDA).

There are several recommended strategies that are proven effective for managing high-cost specialty drugs today. It begins with first understanding the financial and member disruption (i.e., employee retention/recruitment impact) goals for each employer. Then you can focus on these four key areas to ensure a holistic solution is in place to manage costs and appropriate utilization in line with both the contract and clinical perspectives:

1. Maximize contract value:
Obtain the lowest net costs with radically transparent discounts and manufacturer revenue yield through an aligned formulary coupled with an unbiased analysis and independent review strategy. Easier said than done.
2. Evaluate plan design: Examine tiering, copay vs. coinsurance, HDHP vs non-HDHP; Deductibles/Out of Pocket Maximum changes, separate medical/pharmacy accumulators, network design, mail order, Dispense as Written penalties, etc., as well as the extent of each change under consideration (ex: 10% vs 20% coinsurance).
3. Eliminate wasteful spending: Remove questionable low clinical value medications from the formulary; independently review prior authorizations, suspect high-dollar claims, and drugs with the potential to be used off-label; optimize existing therapy and dosing to remedy any per-dose cost improvement opportunities; and independently verify appropriate indication and dosing for complex conditions.
4. Manufacturer assistance programs: Leverage available manufacturer-provided member incentives on specialty medications through a PBM systems-based approach, as opposed to partial carveout solutions that require manual formulary and system manipulations that generate additional risks and inefficiencies.

Tyrone's Commentary:
Pharmaceutical manufacturers are light years ahead of plan sponsors including both public and private entities. They are keenly aware that the "free" drugs given away today are a temporary slow down of specialty drug spend, for instance. They will continue to innovate and manufacture curative pharmaceutical products. As a result, more and more people will not qualify for patient assistance and/or exhaust coupon savings programs. Many plans will see their drug spend fall back to pre-manufacturer assistance levels in 2-3 years. Specialty drugs will soon account for more than three-quarters (75%) of total drug spend wiping away early gains from manufacturer cost-saving programs. 
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Friday, July 16, 2021

Costco approach could have saved Medicare $2.6 billion in drug spending, analysis shows

Medicare spent billions more money on generic drugs for its beneficiaries than warehouse chain Costco did for the same drugs, according to an analysis published Tuesday. This overspending hit $2.6 billion in 2018, Erin Trish, associate director of the University of Southern California's Schaeffer Center for Health Policy and Economics, and colleagues wrote in a letter to the Journal of the American Medical Association's JAMA internal Medicine.

Figure 1: Five P's of Decision-Making
Tyrone's Commentary:

Purchasers of PBM services need to recognize that smaller PBMs can provide similar or better levels of service at a lower cost. Your jobs are not at risk for trying a different approach when the current strategy is severely flawed. In fact, just the opposite is true. Save your company a few million bucks and you have grounds for a pay raise and/or promotion. What drives decisions in your PBM selection process? The best leaders, with P&L responsibility, make decisions at the top of the pyramid (see figure 1). Assess yourself as a plan sponsor. 

They compared the amount Medicare pays for common generic prescriptions in its Part D prescription coverage with prices available to patients without insurance at Costco for 184 common generic drug products. "Medicare overspent by 13.2% in 2017 and 20.6% in 2018 compared with Costco member prices for these prescriptions," they wrote. "Total overspending increased from $1.7 billion in 2017 to $2.6 billion in 2018."

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