Thursday, January 17, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 254)

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, January 14, 2019

CVS makes dubious case for rebates’ impact on drug prices

CVS faced heat throughout 2018 after revelations that its pharmacy middleman business billed taxpayers far more for Medicaid drugs than it paid to the pharmacies that dispensed them, charging three to six times the standard rate. Critics said that a lack of transparency was at the heart of problems with a system that CVS and other non-fiduciary pharmacy benefit managers said was saving taxpayers hundreds of millions of dollars.

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“There is ample evidence via independent studies showing that drug-makers set and raise prices unrelated to the rebates PBMs secure on behalf of their clients,” CVS Chief Communications Officer Kathryn Metcalfe wrote in a letter to the editor.

Asked to support this claim, CVS provided two pieces of what it said was independent research. However, both were done by Visante, a consulting firm founded by a former executive of ExpressScripts, another of the big three PBMs, and one was for the Pharmaceutical Care Management Association, an industry-funded group. Asked who paid for the work and whether it had been peer-reviewed, CVS spokesman Michael DeAngelis punted.

An academic whose research has withstood the rigors of peer review said there is no such work regarding the impact of rebates on the price of prescription drugs — and for good reason. “I can’t point to a study where I can say, ‘Look for this set of drugs. We saw an increase in rebates and look, these drugs, their price went up.’

That study isn’t there because rebates are confidential or private information, so I as a professor don’t have access to data on the drug level on what rebates are there,” said Neeraj Sood, director of research at the University of Southern California’s Schaeffer Center for Health Policy and Economics.

“You and I ask, ‘Is (the amount PBMs are getting) a reasonable number, or should PBMs be making less than that?’ My research didn’t address that question,” Sood said, but he added that he is working on a study to try to find an answer.

Tyrone's Commentary:

Any number above zero is an unreasonable amount for PBMs to be making off manufacturer revenue or rebates. PBMs deserve a nominal fee for its services not excessive overpayments regardless of the source.

[Read More]

Friday, January 11, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 253)

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.

Thursday, January 10, 2019

Turns out CVS's "New" Guaranteed Net Cost Pricing Model is More of the Same - That is Bait and Switch

About a month ago I wrote, "Under the new model, CVS Health will return 100% of drug rebates to employer-sponsored groups and at some point in the future government health programs. The good news is this moves the entire industry one step closer to radical transparency.

The bad news is CVS Health admits it hoodwinked all those clients it sold pass-through arrangements. Those so-called pass-through agreements were nothing more than fee-for-service [opaque] pricing models disguised as pass-through contracts.

It's safe to assume Caremark's (CVS Health's PBM) gross margins will grow next year or worst case remains flat. Shareholders wouldn't have it any other way. So it begs the question, how?" Then I outlined a few ideas.

It didn't take long for someone to present a serious challenge to CVS's "new" guaranteed net cost pricing model. I've followed Dr. Abrams for several years and his research hits the mark. Turns out CVS's new "Guaranteed Net Cost" model is more of the same that is bait and switch.

[Read Dr. Abram's Report Here]