Thursday, September 13, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 236)

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, September 12, 2018

The Marriott Rewards Program and Non-Fiduciary PBMs have a lot in common

When the announcement was made last year that Marriott International was purchasing Starwood Hotels and Resorts I was ecstatic. This meant I would have access to more hotel properties, especially internationally, and let's be honest the Starwood properties are just better. The Starwood hotels, at least in my experience, are more up to date and offer superior customer service.

The cynic in me, however, said this is going to be a tricky project [merging the two rewards programs] so I immediately set out to take screen shots of my accounts such as stays, points, and membership levels. One can never be too careful in protecting what they've earned in the digital age. Long story short these screenshots came in handy not too soon after the integration was complete.

On August 18, 2018 the Marriott and Starwoods Preferred Guest rewards programs were finally combined sort of. While the integration of the two programs was taking place in the background, I was learning how the SPG (starwoods preferred guest) program worked. During my research, what I learned shocked me!

Tuesday, September 11, 2018

The Secret Drug Pricing System Middlemen Use to Rake in Millions

Radical transparency in pharmacy benefits management starts
with training and education. Click here to begin yours.
For years, Frahm’s South Side Drug bought pills from distributors, and dispensed prescriptions to the Wapello County jail. In turn, the pharmacy got reimbursed for the drugs by CVS Health Corp., which managed the county’s drug benefits plan.

As he compared the newspaper notice with his own records, and then with the county’s, Frahm saw that for a bottle of generic antipsychotic pills, CVS had billed Wapello County $198.22. But South Side Drug was reimbursed just $5.73.

So why was CVS charging almost $200 for a bottle of pills that it told the pharmacy was worth less than $6? And what was the company doing with the other $192.49?

Tyrone's Commentary:

It's not a secret at least for those who regularly read this blog or follow me on LinkedIn.

Frahm had stumbled across what’s known as spread pricing, where companies like CVS mark up—sometimes dramatically—the difference between the amount they reimburse pharmacies for a drug and the amount they charge their clients.

[Read More]

Monday, September 10, 2018

Health Plan with 495,000 Covered Lives Says Prescription Medications Account For One in Four Dollars Spent

The high prices of individual medications are the subject of frequent media reports. However, overall national pharmaceutical spending has received somewhat less attention because it is considered less relevant for health care cost containment, as it is dwarfed by national spending on hospital care. This may not be the case for commercial payers.

At 25 percent of total health care expenditures in 2016, net spending on pharmaceuticals by Harvard Pilgrim Health Care (HPHC) was consistent with retail pharmaceutical spending proportions of commercial payers across states and considerably higher than 10 percent to 17 percent often reported nationally.
Click to Enlarge
At HPHC, considering only pharmacy benefit spending would fail to account for the 25 percent of medication spending attributable to those medications administered in physicians’ offices and paid under the health plans’ medical benefit—similar to an estimated national 28 percent spending contribution of non-retail medications.

Tyrone's Commentary:

1 in 4 dollars attributed to prescription medications and this doesn't include spend on inpatient HCPCS J Code drugs! Soon the DOJ will approve the mergers of CVS/Aetna and ESI/Cigna. Like Optum and Prime Therapeutics, CVS and ESI want to capitalize on the potential of inpatient medical spend J code drugs. The PBMs will bring with them all of their knowledge and drug utilization management tools which is a great opportunity to improve patient outcomes and contain costs. Unfortunately, it also gives them the chance to add to costs. Because PBMs generally rely on the demands of clients for the level of transparency provided, the scenario which plays out is largely up to plan sponsors and their advisers. When you know better, you do better.

It is noteworthy that our pharmaceutical spending estimates exclude payments for inpatient-administered medications, as those are included in inpatient spending. Consequently, our data understate total pharmaceutical spending.