Wednesday, May 22, 2019

Elimination of PBM Gag Clauses Allow Independent Pharmacies to Save Patients Money on Prescription Drugs

The CBS 11 Dallas Fort Worth news team asked local pharmacists to ring up the prices of commonly used medications, first, with a popular insurance plan, then the same drug for someone without insurance. Here are two examples of real cases where insured patients paid more.

1) Valacyclovir is a common anti-viral drug used to treat cold sores, chicken pox and shingles. The copay amount with a popular insurance plan is $50, but if you never told the pharmacist you had insurance, the drug would cost $26.67 out of pocket.

2) Armour-throid, used to treat an under-active thyroid, has a copay cost of $150 with a common insurance plan. Without insurance the price is $39.21, a difference of more than $110.

This billing practice is known as a “clawback” and you may have no idea it’s happening. These clawback monies are a contributing factor to significant overpayment for pharmacy benefits management services.

Watch this short video for a demonstration on how clawbacks work.

While pharmacists have known about this price discrepancy for years, in many cases they have been prevented from telling their customers. Gag clauses in contracts made by insurers and pharmacy benefit managers (PBMs) often prevented pharmacists from discussing alternative price options with their customers. However, last year the federal government made these gag clauses illegal.

Monday, May 20, 2019

Top 7 Reasons the PBM Industry is Ripe for Disruption

1.  Uncertainty Over Regulation

Federal and State governments are now keenly aware of the self-dealing which takes place in PBM arrangements. Ohio’s Attorney General, Dave Yost, is continuing to wage war on non-fiduciary PBMs or pharmacy benefit managers. You might remember him from an earlier blog post when he served as Ohio's State Auditor.

AG Yost just announced a four-part proposal and called for quick action from the state’s legislature to shine a bright light on PBM contracts and cut down on hidden cash flows. Yost’s proposal calls for:

Image result for disruption
  • Drug purchases in the state to be conducted under a master PBM contract that is administered by a single contact point
  • Ohio’s Auditor of State to have full power to review all PBM contracts, purchases and payments
  • PBMs to operate as fiduciaries, uh-oh!
  • The state to prohibit nondisclosure agreements on drug pricing.
Last summer, in his previous role as state auditor, Yost learned PBMs earned nearly $225 million through spread pricing between April 2017 and March 2018 while operating in Ohio Medicaid. As a result, the state cancelled all PBM contracts in Medicaid that used spread pricing.

2. Power is Consolidated

One of the important signs that an industry could be disrupted is imbalance, or dominance by one side of the economic equation. Oligopolies, where a few companies have consolidated vast amounts of the market share either on the supply or demand side, are often good candidates. Make no mistake about it ESI, Caremark and Optum is an oligopoly.

Monday, May 13, 2019

Here's one reason why prescription drug prices are so high: the fix is in!

Some say it might be the biggest price-fixing scheme in U.S. business history. More than 40 states filed a 500-page lawsuit accusing generic drug makers of a massive, systematic conspiracy to bilk consumers out of billions of dollars. For example, text messages implicate at least three companies: Heritage, Aurobindo and Teva, the world's largest generic drug maker. The national accounts manager at Heritage wrote:
Click to Learn More

A.S.: "We are raising the price right now — just letting you know, Teva says they will follow"

A.S.: "Aurobindo agrees too"

A corporate account representative from Citron answered:

KA: "...we are def [initely] in to raise pricing ... are doing this immediately"

The Heritage executive responded:

AS: "We are raising our customers 200% over current market price."

Congress established the current generic industry in 1984 to push prices down. The idea was that once patents on brand name drugs expired, generic makers would compete to make drugs more affordable. But 1,215 generics, many of them the most prescribed drugs, jumped on average more than 400 percent in a single year.

Connecticut has been examining the generic drug industry for almost five years. Last night, 60 minutes gave us a peek inside the investigation. Two relentless attorneys built the cases the state attorney general calls the most egregious examples of corporate greed he has ever seen.

[Read More]

Thursday, May 9, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 268)

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.