Thursday, March 21, 2019

A Lack of Competition Leads to Brand Drug Price Increases

Image result for brand drug price increase 2018Inmaculada Hernandez, PhD, assistant professor at the Pitt School of Pharmacy, and colleagues, studied pricing data from the First Databank, along with pharmacy claims from the UPMC Health Plan. Some 19,000 new and existing oral and injectable drugs used in the outpatient setting between 2008 and 2016 underwent analysis. The group aimed to quantify which therapies were the most significant contributors to changes in cost.

“One of the important reasons we conducted this study is to increase transparency in the drug pricing process,” Hernandez said in an interview with Healio Rheumatology. “The prices of new drugs make headlines, but when you look at all of the drugs available on the market, and where the health care dollars are going, it is not just the entry of these new products that is causing the overall increases.”

In their study, Hernandez and colleagues presented results in a number of ways, including a breakdown of brand name and generic drugs. For brand name drugs, the group reported a 9.2% increase for oral drugs and a 15% increase in injectables; the researchers reported that existing drugs largely drove this increase. For generics, oral drug costs increased by 4.4%, while injectable drug costs rose 7.3%. New drug entry drove these increases, according to the findings.

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Thursday, March 14, 2019

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 260)

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, March 11, 2019

Uncovering Hidden Specialty Drug Spend Outside of the Pharmacy Benefit

When reviewing overall drug trend, specialty drugs represent a small volume of prescription utilization although specialty drug spend represents a large share of drug costs.  As an example, when comparing branded specialty vs. branded non-specialty drugs, branded specialty accounted for only 3% of total prescriptions in comparison to 34% of the share of spending based on the November 2018 BlueCross BlueShield Prescription Drug Costs Trend Update Report.Therefore, the appropriate management of specialty drugs continues to be an area of focus for those involved in administering the pharmacy benefit.

Furthermore, payers should have oversight of both pharmacy and medical spend, particularly when managing specialty drugs.  A large portion of specialty drug spend occurs under the medical benefit.  According to a 2017 CVS Health  report, 45% of specialty spend occurs under the medical benefit with the remaining 55% under the pharmacy benefit:2

Moreover, there are many unique differences within each benefit. One notable difference is that medical claims are billed utilizing HCPS codes (commonly referred to as J-codes) vs. NDC codes for pharmacy claims.  J-codes present various challenges which include issues with certain drugs billed under a miscellaneous code if a specific code doesn’t exist, utilizing one j-code for several different drugs and inaccurate billing.  

Payers will need to analyze specialty drug data from the medical and pharmacy benefit.  In addition to the standard reporting available for drugs paid under the pharmacy benefit,  obtaining medical side specialty drug reporting is essential.  The 2018 PBMI Specialty Drug Trends Report stated that the majority (89%) of respondents reported that their PBM or other healthcare vendor tracks specialty and non-specialty drug spend separately for drugs covered under the pharmacy benefit. 

However, less than half (48%) reported that their PBM or healthcare vendor tracks specialty drug spend under the medical benefit……For the subset of respondents reporting that specialty spend under the medical benefit is tracked, the source of these reports is most often their health plan.”3

Key next steps towards appropriate management of specialty drugs would start with the understanding that a large portion of the spend exists under the medical benefit and then to obtain pharmacy reporting from the medical side in order to have a complete view of the total specialty drug spend under both benefits.

3)    Pharmacy Benefit Management Institute. 2018. Trends in Specialty Drug Benefits. Plano, TX: PBMI. Available from

Wednesday, March 6, 2019

Eli Lilly and Company to Offer Generic Insulin at 50% Off Brand Name Humalog

Humalog rapid-acting insulin my introduction into the pharmaceutical industry
First things first, get this product on your formulary yesterday! It shouldn't take six months for a P&T committee review. Now, the primary reason for this blog post.

My career in the pharmaceutical industry began in 2002 with Eli Lilly and Co. I started out as a sales representative in the diabetes care division before electronic prescribing. I don't know why I added the part about electronic prescribing other than to reflect back on how fast time flies. Not too many employees speak highly of a company once they leave. I do, however, of Eli Lilly and Co. every chance I get.

Before going any further, I need to preempt any attempts to downplay what I'm about to write. Much like Eminem when he battle raps, I know what my competition is going to say before they utter a single word.

Eli Lilly is a great pharmaceutical company who puts patients first. I know, I is a public drugmaker, with shareholders, and generates gargantuan margins from its product portfolio. Hear me out.

1) Back then, in 2002, and still today the sales culture was about putting the patient first always. Of course, the company has to keep shareholders happy but it didn't do it at the expense of patients. I truly believe this and have more street smarts than most so no I'm not drinking the Kool-aid.

2) In a team meeting, my manager called me into a private room during a break. He handed me a folder and inside was a letter explaining my salary was going from $65,000/yr to $85,000/yr. I got light-headed and nearly passed out. It wasn't so much about the money instead it was the recognition I appreciated most of all. There are two things of note. First, I had not asked for a raise. Second, I was less than one year into my tenure with Eli Lilly still they cut the check!

3) Less than a year later, I was promoted way ahead of schedule. I'm talking six or seven years ahead of schedule. They recognized my results and rewarded me for them. No red tape, business case, or performance review just you deserve it so here you go.

I write all of this to say I'm not surprised Eli Lilly and Co. announced plans on Monday to sell a half-price version of its popular insulin injection Humalog. True, it is fending off criticism about rising drug prices, especially insulin, yet like my pay raise it didn't have to do this.

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