“Gross” Invoice Cost for Top Selling Generic and Brand Prescription Drugs – Volume 137

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 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.

Note: Prices listed herein are gross thus do not account for rebates, discounts or other purchase incentives which ultimately reduces the net cost.

Can ‘Pay for Performance’ Control High Drug Prices?

[Click to Enlarge]

Can payers save money on increasingly expensive prescriptions by setting prices based not on drugmakers’ wishes, but on how well the medicines control, contain or cure disease?

The notion of tying drug payments to results, called “pay-for-performance pricing” or “value-based pricing,” already is being tested by some health insurance companies, some pharmaceutical companies and Medicare. And just last week, the Oregon Health & Science University announced it will undertake a large-scale research project to examine how states could apply the concept to Medicaid.

Tyrone’s comment:  If all the savings are passed-back then great! But, value-based pricing is rife with hidden cash flow opportunities for non-fiduciary pharmacy benefit managers. Traditional or non-fiduciary PBMs are aware of the attention being paid to existing pricing arrangements or overpayments (see ESI, Anthem dispute) so this new pricing arrangement could serve a dual purpose; to show an effort to control costs AND protect their margins. Put another way, pay-for-performance arrangements provide an opportunity for non-fiduciary PBMs to protect margins while giving the “appearance” of reducing drug costs. How will a payer know when a drug has failed and just as important what happens to the revenue when a manufacturer credits it, for example? Remember this, better doesn’t necessarily mean good. The concept is both brilliant and misleading so close the loopholes!

If payers are able to adopt a workable performance- or value-based pricing system on drugs, they may be able to hold down spiraling Medicaid spending, said Matt Salo, executive director of the National Association of Medicaid Directors.

Medicaid, the federal-state health insurance plan for the poor, is staggering under escalating prescription drug prices just as patients and private insurers are, and the costs are straining state budgets. On average, roughly a quarter of a state’s budget goes to Medicaid spending.

Medicaid spending on prescription drugs for Medicaid recipients rose 24.3 percent between 2013 and 2014, in part owing to an increase in enrollment under the Affordable Care Act. That was nearly double the increase in total U.S. prescription drug spending in that same period, according to federal data.

And there’s every reason to think the increase in spending will continue as drugmakers prepare to introduce dozens more “specialty drugs,” high-priced, complex medications developed from living cells to treat chronic conditions such as hepatitis C, HIV, cancer, rheumatoid arthritis and multiple sclerosis.

Although they barely existed a decade ago, last year specialty drugs accounted for nearly a third of Medicaid spending, or about $16.9 billion. Specialty drugs make up just 1.5 percent of claims, but they could play a big role in the rise of Medicaid spending on drugs.

Something has to give, said Jeff Myers, CEO of Medicaid Health Plans of America, the trade association representing Medicaid managed care plans. “A system in which the manufacturers are pricing to get the most money out of taxpayers isn’t workable,” he said.

Pay-for-Performance

Currently, Medicaid and federal health plans such as Medicare and the U.S. Department of Veterans Affairs are constrained in bargaining with manufacturers over drug prices.

Pharmaceutical companies enter into agreements with the federal Centers for Medicare and Medicaid Services on what drugs all state Medicaid programs will make available to patients. In return, the pharmaceutical companies agree to give the states fixed discounts off their average price.

But those prices are set by the manufacturers, and the manufacturers are not governed by any price ceilings, nor are the prices based on the drugs’ success, such as whether they control or cure a patient’s disease.

Pay-for-performance or value-based pricing would change that. It would tie payments for prescription drugs to their effectiveness, whether they did what they were designed to do.

How well do medications for high blood pressure or cholesterol, for example, keep patients in healthy ranges for each? How well do medications control symptoms of autoimmune diseases? How much do cancer drugs extend life? And how much do the drugs save the health care system by enabling patients to avoid medical treatments they no longer need?

How to Price

Evaluating the effectiveness of a drug will be essential to pricing under the concept. One tool health plans could use for evaluating cancer drugs to establish a price has been developed by the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center, in New York.

Called the “DrugAbacus,” the tool creates a price for cancer drugs based on how many years of additional life they provide, the severity of their side effects, the rarity of the disease and the novelty of their chemistry.

<< Read More >>

“Gross” Invoice Cost for Top Selling Generic and Brand Prescription Drugs – Volume 136

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 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.

Note: Prices listed herein are gross thus do not account for rebates, discounts or other purchase incentives which ultimately reduces the net cost.

“Gross” Invoice Cost for Top Selling Generic and Brand Prescription Drugs – Volume 135

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 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.

Note: Prices listed herein are gross thus do not account for rebates, discounts or other purchase incentives which ultimately reduces the net cost.

Chicken Soup for the Self-Funded Employer: Foolproof PBM Contracts

Having spent all of my post-graduate years (15) in the pharmaceutical industry, I’ve come to know two immutable pharmacy benefit management principles and they are:

1) You get what you exactly measure [payer-side]
2) The things that you measure, costs and outcomes, will get gamed 

Analytics may help ease the pain but don’t alone solve the problem which is excessive overpayments. Furthermore, analytics can worsen the problem because purchasers rely too heavily on it. In other words, don’t rely solely on analytic software programs and all the neat reports they spit out especially if what’s being measured is inherently flawed (i.e. AWP and MAC).

Eliminating overpayments is done two ways:

➤ Sophisticated purchasers, of PBM services, with super strong negotiating skills lead the procurement of services. 

➤ Enter into a fiduciary or foolproof PBM Services Agreement. A business process is still required to systematically measure performance throughout the contract term. 

Here is a screenshot of just some of the language in a fiduciary contract.
[Click to Enlarge]

Douglas Adams wrote in Mostly Harmless, “a common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools.” I’m reminded of this each time I read something about the Anthem, Express Scripts dispute or Wells Fargo.

One slide from my “don’t miss” webinar Tuesday September 13 at 3:00 PM ET

Here is just one slide from my presentation at Tuesday’s webinar with professionals already registered to attend from finance, HR, insurance, procurement and other functions.

This slide is a sledge hammer on the status quo and it will enable you to create a compelling case for change. It’s also the exact message non-fiduciary PBMs don’t want you to hear. Want to know more?

Register: https://attendee.gototraining.com/rt/3034343502849349634
  
A snapshot of what you will learn in this 30 minute webinar:

  • Hidden Cash flows in the PBM Industry
  • The definition of binding transparency (hint: there is no standard industry definition for transparency)
  • How to calculate cost of pharmacy benefit manager services or CPBMS
  • Why Anthem, Inc. sued Express Scripts Holding Co.
  • The difference between actual acquisition cost and MAC 

See you Tuesday September 13 at 3:00 PM ET!

Sincerely,
Tyrone D. Squires, MBA  
TransparentRx  
2850 W Horizon Ridge Pkwy., Suite 200  
Henderson, NV 89052  
866-499-1940 Ext. 201

P.S.  Yes, it’s recorded.  I know you’re busy … so register now and we’ll send you the link to the session recording as soon as it’s ready.

“Gross” Invoice Cost for Top Selling Generic and Brand Prescription Drugs – Volume 134

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 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.

Note: Prices listed herein are gross thus do not account for rebates, discounts or other purchase incentives which ultimately reduces the net cost.

[Podcast] Rx Drugs and the U.S. Health System – A Conversation About Drug Prices

This is an awesome podcast and you can feel the tension between the manufacturer (Pfizer) and PBM (Express Scripts). Unfortunately, none of the speakers took the bait. Grab a cup of coffee or your favorite beverage and listen to the entire hour. 

It’s nice to be able to fill in some of the holes when dealing with a complicated issue. So, I strongly recommend you read these two blog posts before listening to the podcast. 

1)  How Pfizer set the cost of its new drug at $9,850 a month 
2)  Express Scripts generates top-line revenue of $76.63 per claim! 

My big takeaway is that Express Scripts is extremely arrogant; lecturing manufacturers on how to run their businesses. Imagine for a second the strong arm tactics ESI might use when negotiating rebates not for the sole benefit of plan sponsors but its own pockets. Click play to listen…

Keep this point in mind. While Dr. Miller stresses transparency to clients, he failed to define transparency. There is no standard industry definition for transparency thus each PBM approaches it very differently. I’d like to offer a standard industry definition for transparency. 

Transparency – the perpetual elimination of all hidden [PBM] cash flows and full disclosure of service revenues, including their sources, on a plan-specific basis.

“Gross” Invoice Cost for Top Selling Generic and Brand Prescription Drugs – Volume 133

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 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.

Note: Prices listed herein are gross thus do not account for rebates, discounts or other purchase incentives which ultimately reduces the net cost.