Tuesday, December 7, 2021

Tip of the Week: Think Twice Before Joining a PBM Drug Pricing Coalition

Documents provided to Axios reveal a new layer of secrecy within the maze of American drug pricing — one in which firms that manage drug coverage for hundreds of employers, representing millions of workers, obscure the details of their work and make it difficult to figure out whether they're actually providing a good deal. 
Figure 1: Explanation for coalitions withholding data

How it works: Employers hire pharmacy benefit managers to handle the drug coverage in their workers' health insurance plans. PBMs negotiate prices with drug manufacturers and decide which drugs get preferential treatment.

Big consulting firms work with PBMs to organize drug pricing coalitions, pulling Fortune 500 companies and other large employers into purchasing agreements that, in theory, maximize negotiating power. But it can be difficult for employers to determine the financial upside of these arrangements. So what are employers not seeing within coalitions? The data on prices, and understanding whether those prices are a good deal.

Tyrone's Commentary:

I'm not opposed to coalitions per se. I am, however, opposed to information asymmetry in health care. Information Asymmetry or "Information Failure" is a term that refers to when one party in a business transaction is in possession of more information or knowledge than the other (see figure 1). In certain transactions, sellers might take advantage of buyers because information asymmetry exists whereby the seller has more knowledge of the good or service being sold than the buyer. The best proponent of transparency is informed and sophisticated purchasers of PBM services. If a coalition is engaging in information asymmetry, employers in that coalition are leaving money on the table.

Friday, December 3, 2021

Pharmacy Benefit Managers are Outwitting Attempts at Accountability, Tougher Rules [Weekly Roundup]

 News and notes from around the interweb:

  • The case for "unbundling" self-funded health benefit programs. They [employers] can unbundle their plan and choose a fully transparent PBM that makes sure all of the rebate dollars get back to the plan within certain time frames and their contractual obligations are potentially different than they might have been within the bundled plan. That unbundling could save the employer a significant amount of money without negatively affecting the services provided to plan participants.
  • Key Drugs in Specialty Pharmacy Slated to Launch in 2022. Ray Tancredi, RPh, MBA, divisional VP of specialty pharmacy development and brand Rx/vaccine purchasing at Walgreens, addresses key drugs in development that are slated to launch in 2022, key drugs in development that are slated to launch in the future of note, and some of the promising and unique medications to keep an eye on that are expected to be approved in the specialty pharmacy space.
Join the Movement!
  • Pharma Grapples With Best Price Accumulator. A new CMS policy, issued in December 2020 with an effective date of Jan. 1, 2023, requires pharmaceutical manufacturers to “ensure” the benefit of copay assistance programs goes only to patients to maintain the exclusion from best price reporting. If a coupon’s full value doesn’t accrue to the patient, the pharmaceutical manufacturer must count it as a discount to the drug’s Medicaid price.
  • Pharmacy and PBM Leader Deloitte Consulting: Specialty Drugs Rely on Personalization for Optimal OutcomesThe high cost of specialty drugs makes it important to use companion diagnostics and other tests to make sure the drug is going to the right patient, said George Van Antwerp, MBA, managing director, Deloitte Consulting. When we look at the cost of specialty drugs, and especially some of the cell and gene therapy drugs, which are really all about precision medicine, those costs mean they have to work. They have to be focused on and personalized to the individual.
The Certified Pharmacy Benefits Specialist (CPBS) educational offering includes knowledge that is critical to effective management of the pharmacy and medical drug benefit. If you want to learn more, click here.

Thursday, December 2, 2021

Reference Pricing: "Gross" Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 391)

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.

Tuesday, November 30, 2021

Tip of the Week: Don't Opt-Out of Step Therapy Programs

Step therapy is a process that requires physicians to prescribe more costly drugs, usually brand drugs, only after a less costly drug treatment has been tried and failed with a patient. Step therapy is just one tool in the drug utilization management (DUM) toolkit which includes drug utilization review, quantity limits, prior authorization, refill too soon, and mandatory generic enforcement programs just to name a few. Step therapy programs evoke strong emotions in both support and opposition.

Click to Enlarge

Positions in Opposition of Step Therapy Programs

Coalition of State Rheumatology Organizations: Step therapy can lead to serious negative patient outcomes and increased costs if not carefully managed. Step therapy needs to be regulated by nationally recognized clinical practice guidelines. Physicians should have the authority to override step therapy protocols based on a patient’s medical history. Override protocols should be clear and abbreviated.

Patient Rising: Step therapy prevents patients from accessing treatments prescribed by their doctor, and instead mandates a course of treatment mandated by their insurance carrier. Patients start with older, cheaper treatments, and if they are not effective, patients “step” to another treatment. Some patients suffer terribly during this process, becoming sicker when denied prescribed treatments. For this reason, it becomes abundantly clear why patients across the country have another description for step therapy: “fail first.” When a patient has to fail first on a drug before being allowed to take the medication originally prescribed, the patient, physician and public health suffers.

National Psoriasis Foundation: Because of the rise in costs of conventional medical treatments, many patients nowadays are beguiled by their health insurance companies into undergoing considerably less expensive options such as step therapy. This “wealth before health” kind of thinking is actually futile and unwise, at best, since step therapy is never a good option in treating life-threatening diseases.

According to a new study, led by researchers at Tufts University, tracked the application of step therapy protocols across 17 payers. Across those insurers, 38.9% of coverage policies deployed some kind of step therapy protocol. On average, insurers required 1.5 steps in their protocols, with 66.6% of policies requiring a single step. Of the remaining policies, 22.7% required two steps, 7.6% were three steps and 3.1% included four or more steps, according to the study. 

Here's the part few opponents talk about

Before I owned a mail-order pharmacy and fiduciary-model PBM, I was a pharmaceutical sales representative. Yes, whatever you've heard about drug sales reps it is likely true. It was a good gig with a great company. Eli Lilly and Company had a big sales force and effective marketing machine behind it. It took me 1.5 years but I took a territory ranked something like 600 out of 612 to #12 in the country. 
I did it by asking doctors to prescribe a new brand oral antidiabetic, Actos, as a first line drug therapy or in combination with metformin. It wasn't any more complicated than that.  

Looking back, there were thousands of prescriptions written for an expensive brand drug when the "old" tried and true generic metformin would have been as efficacious at 1/100 the cost. Multiply that by the tens of thousands of other drug sales reps across the country doing exactly the same thing. I'll dig deeper into direct-to-consumer advertising as a key sales driver in a separate post. But don't kid yourself. A lot of people see a TV ad then go into the doctor's office and say, "I want to try that." Simply put, pharmacy benefit managers deploy step therapy as a tool to manage drug costs.

Step therapy programs are not created equally. Some PBMs run better, more efficient step therapy programs than others. That said, no PBM wants to put patients in harms way. Opponents of step therapy programs aren't cutting the checks which cover the high costs of biologics, cell or gene therapies. Sure, health plan sponsors can opt out of step therapy programs but in doing so you expose your company to massive FWA