Reference Pricing: "Net" Invoice Cost for Top Selling Generic and Brand Prescription Drugs (Volume 116)

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 healthcare reform. 

The costs shared below are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." 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.

Express Scripts generates top-line revenue of $76.63 per claim!

Pharmacy-benefits manager Express Scripts Holding Co. raised its profit projection for the year after reporting a 19% increase in first-quarter profit.

The St. Louis company, now the largest manager of prescription-drug benefits in the U.S., projects profit of $6.31 to $6.43 a share, compared with its earlier view of $6.10 to $6.28 a share.

Meanwhile, for the current quarter, Express Scripts expects adjusted profit of $1.55 to $1.59 a share, compared with analysts’ projected $1.57 a share, according to Thomson Reuters.

Read: Suckers are Beneficial to "Traditional" Pharmacy Benefit Managers -- They Cover the Overhead

The company, which Monday affirmed its projection of 1.26 billion to 1.3 billion in adjusted claims for the year, projects 312 million to 322 million adjusted claims this quarter. Last year, it reported 321.2 million adjusted claims in the second quarter.

Game of Thrones: Express Scripts Holding Company Countersues Anthem

Express Scripts Holding Co. has turned the tables on Anthem, blasting the health insurer in a new lawsuit by arguing Anthem is the party at fault for the deterioration of their drug pricing agreement.

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Last month, Anthem sued pharmacy benefits manager Express Scripts for more than $15 billion in damages after months of public animosity between the two investor-owned behemoths. Anthem alleged Express Scripts, which negotiates prices with drug makers on behalf of payers and employers, was not passing along enough drug price savings, and Express Scripts therefore was reaping “an obscene profit windfall.”

But Express Scripts countered with a lawsuit of its own filed Tuesday in U.S. District Court for the Southern District of New York. The PBM denied Anthem's allegations and elevated the rhetoric, making a messy outcome all but certain.

Reference Pricing: "Net" Invoice Cost for Top Selling Generic and Brand Prescription Drugs (Volume 115)

Why is this document 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 healthcare reform. 

The costs shared below are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." 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.

Shining a Light on the Dark Practice of Rx Price Gouging

Remember Martin Shkreli, the indicted former CEO of Turing Pharmaceuticals, who increased the price of HIV treatment 5,000%, from $13.50 to $750 a pill overnight? How could those who saw his image forget how this villain became even more dastardly when, to avoid incriminating himself, he invoked the 5th amendment, smirking before a congressional committee and tweeting that they were “imbeciles”? Shkreli embodied everything that’s wrong with drug price gouging today.

Drug profits continue to rise faster than any other healthcare
sector, affecting approximately half of all Americans and 90% of seniors who take a prescription drug. Prescription drug spending spiked 12% in 2014 – the largest increase in a decade – helping the United States maintain the dubious distinction of paying the highest costs for drugs in the world. Prescription drug spending in the US was approximately $457 billion in 2015, or almost 17% of overall health spending. Three-quarters of the public thinks drug costs are too high as drug makers continue to raise prices on branded drugs and cost savings in generics slow.

Many factors drive drug prices. Greed by pharmaceutical executives like Shkreli is only one of them. New medications for hepatitis C drive overall upward costs because they can be used by millions of people. Because they are used by small populations for a short time, specialty drugs for rare or complex conditions do not make as much impact, but still inflate the bottom line.

Center for Medicare and Medicaid Services New Plan to Curb Medicare Prescription Drug Price Inflation

After years of discussions and "what ifs," the Obama administration has taken action by implementing a series of experimental changes to the Medicare program designed to help reduce the costs of treating patients, ultimately saving the patients money and Medicare in the process.

The way the Medicare program works now is pretty straightforward: Part B pays the average sales price of a drug plus a 6% add-on. This add-on is what's designed to cover the costs of care for physicians and their staff. But there's the idea floating around among the Centers for Medicare and Medicaid Services, which is implementing this experiment, that physicians are being influenced to prescribe the most expensive drug rather than the best drug for a patient to garner the biggest add-on possible.

The solution? The new model, which is being tested in select markets, pays the average sales price of a drug while imposing an add-on payment of just 2.5%, plus a flat-fee payment of $16.80 per drug per day. The CMS's idea behind this change is to see if patient quality and value of treatment can be improved while simultaneously saving Medicare money.

Source: Centers for Medicare and Medicaid Services

Although improved patient quality and value are broad goals of the CMS, there are a few specific strategies they're targeting. For one, they hope to substantially reduce patient cost-sharing. If physicians opt for those cheaper medications, then the consumer will be on the line for 20% of a much lower cost (Medicare typically covers 80% of qualified medical expenses, with the consumer picking up the remainder).

National Drug Spend | $310B in 2015 and projected to double by 2020

The total spend on medications in the U.S. grew to $310 billion in 2015 – up 8.5 percent from the last year, according to a new report from the IMS Institute for Healthcare Informatics. But it’s expected to double by 2020, to around $610 billion on an invoice price basis.

Indeed, the growth rate is supposed to increase each year through 2020, the report says – thanks largely to drugs targeting cancer. “Of the $282 billion of growth over the next five years from branded medicines, $91 billion is forecast to result from new medicines launched during that period, with the largest share coming from oncology,” the report says.

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The number of recently approved drugs buoyed the overall spend: Demand for new branded drugs was high. Generics didn’t help offset much of the costs typically spent on branded drugs, though higher rebates and price concessions from manufacturers helped offset these pressures on patients themselves.

Reference Pricing: "Net" Invoice Cost for Top Selling Generic and Brand Prescription Drugs (Volume 114)

Why is this document 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 healthcare reform. 

The costs shared below are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." 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.

Recent Trends in Prescription Drug Costs

This Visualizing Health Policy infographic spotlights national spending on prescription drugs and the public’s views on pharmaceutical prices. Prescription drug spending rose sharply in 2014, driven by growth in expenditures on specialty drugs, including medications to treat cancer and hepatitis C. Medicare’s spending on prescription pharmaceuticals also has risen: between 2004 and 2014, the program’s share of US drug expenditures increased from 2% of $193 billion to 29% percent of $298 billion.

Reference Pricing: "Net" Invoice Cost for Top Selling Generic and Brand Prescription Drugs (Volume 113)

Why is this document 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 healthcare reform. 

The costs shared below are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." 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.

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 pharmacy cost then determine if a problem exists. When there is a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means 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.

When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization. In this case, the market check language is effectually meaningless.

OptumRx and Walgreens to partner on 90-day prescriptions

The nation’s largest drugstore chain, Walgreens Boots Alliance, and the OptumRx pharmacy benefit management unit of UnitedHealth Group say they will collaborate to sell a pharmacy and drug management service to employers and other potential clients.

The partnership between Walgreens and OptumRx may help bring an end to speculation Walgreens will buy its own PBM company as the drugstore chain instead works more closely with health plans and PBMs on commercial deals. Some on Wall Street have speculated Walgreens may need to own a PBM like its rival CVS Health, which has for years now owned a PBM in Caremark.

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OptumRx and Walgreens say their partnership will offer a “more convenient, accessible and connected pharmacy experience.” No financial terms were disclosed of the new integrated pharmacy care offering the two will make available to commercial clients effective Jan. 1, 2017.

The partnership gives enrollees in OptumRx drug benefit plans the option to fill 90-day prescriptions for the same cost at the generally cheaper home delivery co-payment level.

Tyrone's comment:  Plan sponsors who have OptumRx as their PBM vendor and are keen on eliminating overpayments should insist on being able to view the pharmacy network contract(s) between OptumRx and Walgreens. This deal will inevitably create an opportunity for spreads larger than normal; any spread is unacceptable.

Optum , which manages more than one billion prescriptions, and Walgreens, with its network of more than 8,000 drugstores, will also work to improve clinical outcomes by sharing health data and analytics while connecting enrollees in Optum and UnitedHealth benefit plans with “clinical guidance” that addresses various diseases and drug adherence.

“By integrating Walgreens industry-leading in-store pharmacy capabilities and convenient retail locations with OptumRx’s advanced pharmacy care services, we expect to create significant value for our clients and members,” Optum chief executive officer Larry Renfro said in a statement.

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