Thursday, June 17, 2021

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 370)

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.

 

Wednesday, June 16, 2021

Mississippi AG Files Lawsuit Against Insulin Manufacturers and PBMs over Insulin Pricing Scheme

The Mississippi attorney general last week filed a lawsuit accusing several drug makers and pharmacy benefit managers of conspiring to set prices for insulin, the life-savings diabetes treatment that has become a poster child for the high cost of prescription medicines. 

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The lawsuit alleged that the manufacturers benefited from a scheme in which prices were “artificially” inflated to win placement on formularies, the list of medicines for which insurance is provided. And pharmacy benefit managers profited by receiving “secret” rebates from the manufacturers and also through their own mail-order pharmacy sales. In the alleged scheme, the Manufacturer Defendants artificially and willingly raise their reported prices, and then deceptively refund a significant portion of that price back to PBMs through things called rebates, discounts, credits, and administration fees. 

Tyrone's Commentary:

I've been teaching and writing about how non-fiduciary PBMs engage in self-dealing for 9.5 years. Check the first blog post. Some of my readers have become clients others were dismissive. Are you listening now? The amount of money some PBMs are printing, based primarily on predatory behavior, is wrong. Don't be the last one to the party. Overpayments to PBMs isn't just about money. These overpayments impact the level of care patients receive - health care outcomes. Don't wait another decade before you take decisive and corrective action.

They [PBMs] also switch medications within their formularies to suit their pricing scheme to the detriment of diabetics relying on those drugs the lawsuit alleges. This practice has resulted in record profits for Defendants at the expense of diabetics and payors. 

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Tuesday, June 15, 2021

PBM Agrees to Pay a Record $88.3 Million to Settle Ohio Case

The settlement is the first and largest in the country secured by a state attorney general against a pharmacy benefit manager (PBM). “Centene used sophisticated moves to bill unearned dollars – moves known only at the top levels of health care companies,” Yost said. “It has taken a huge effort by my team to untangle this scheme--and now that we know how it works, the alarm bells should be ringing for anyone using similar tactics.”

Centene Corp. (CNC) has agreed to pay Ohio $88.3 million to settle a lawsuit filed by Attorney General Dave Yost in March alleging the pharmacy benefit manager overbilled the Ohio Department of Medicaid for pharmacy services it provided. Yost also alleged Centene and its subsidiary, Buckeye Health Plan, conspired to misrepresent the costs of pharmacy services, including the price of prescription drugs.

Formula: True Cost of PBM Services

Most Ohioans’ prescription-drug plans are under the management of a PBM through their health insurance plans. PBMs are middlemen in control of prescription-drug costs, and they decide which prescription drugs are covered by health insurance companies.

Tyrone's Commentary:

Well that didn't take long for Centene to fold. Now that the cat is out of the bag, I wonder if commercial plan sponsors and their advisors will be as aggressive in eliminating overpayments to non-fiduciary PBMs? 

AG Yost began investigating PBMs in 2018 while state auditor. Yost found that PBMs, while managing the Department of Medicaid prescription drug program, were engaged in spread pricing, which is an artificial inflation of prescription drug pricing. That investigation found that PBMs collected more for drugs compared to the actual cost to dispense the drugs. With help from outside counsel, the Office of Attorney General Yost conducted a thorough investigation of these practices, finding significant breaches of contract.

Notably, the breaches include:

  • Filing reimbursement requests for amounts already paid by third parties.
  • Failing to accurately disclose to ODM the true cost of pharmacy services, including the disclosure of discounts received.
  • Artificially inflating dispensing fees.

Continue Reading >>

Thursday, June 10, 2021

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 369)

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.