High-Priced Drugs: Estimates of Annual Per-Patient Expenditures for 150 Specialty Medications [Report]

Recent reports have estimated overall spending on prescription medicines in the United States to be $337 billion, in 2015. Global technology company IMS Health’s forecast of the world drug market, Global Medicines Use in 2020: Outlook and Implications, projects drug spending worldwide to reach $1.4 trillion by 2020, with U.S.-based spending totaling $560 billion - $590 billion.

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Although use of lower-priced generic medications is expected to exceed 90 percent of all prescriptions dispensed in the United States over the next five years, IMS anticipates 225 new medications will be introduced to the U.S. market during this same time period. Many of these agents will be specialty pharmaceuticals, which are generally understood to be drugs that are structurally complex and often require special handling and delivery; are often administered in an office-setting; and can include complex molecules such as biologics.

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Another distinguishing feature of specialty pharmaceuticals is their high prices. Previous studies have shown that specialty drugs together account for less than 2 percent of all prescriptions written; however, these drugs make up almost one-third of total spending on prescription medications. It is common for these medications to cost thousands of dollars per patient per month.

Both the current state of prescription drug pricing and the projections of continued increases in drug spending in the years ahead have prompted a variety of proposals from both federal and state lawmakers.

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 148

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 "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.

Top pharmacy challenges of 2017

High drug prices will continue to be the biggest pharmacy challenge for payers in 2017, sparked by the entry of many new specialty drugs on the market for some common chronic diseases— such as diabetes, heart disease, Alzheimer’s, and rheumatoid arthritis—and rare diseases, such as lupus and NASH (nonalcoholic Steatohepatitis, more commonly known as fatty liver disease).

Despite being used by only 1% to 2% of the population, specialty drugs accounted for 37% of U.S. drug spend in 2015 and are projected to reach 50% by 2018, according to the Express Scripts 2015 drug trend report, released in March 2016. While high drug prices will continue to plague the industry in 2017, the following four factors will exacerbate the problem:

1. Missing link between cost and outcomes

There is a lack of outcomes-based contracts with manufacturers but if you want physicians to buy into value-based reimbursement, payers need to put pressure on manufacturers to demonstrate value and look at outcomes differently.

Payer organizations are thinking about total cost of care, not just the price of single products, she says. They are looking at the continuum and range of medical and pharmacy costs tied to outcomes. One drug may be more expensive than an alternative but positively affects the total cost of care.

Outcomes-based contracting is more aligned with better health and lower costs. “We need a combination of strategies to create accessibility and affordability and align healthcare delivery and reimbursement based on value, not volume. We must hold manufacturers more accountable in contracts, creating large unit cost discounts day one and unique components to stand behind performance. If drugs don’t perform as promised, there should be more discounts.”

2. Sparse competition

“The challenge is timing in some therapeutic areas,” Fleming says. “For example, when Sovaldi came on the market 2014, as a treatment for hepatitis C, it was the only drug but by the end of the year, there were many more. The same thing is expected to happen with Alzheimer’s. There is the notion of competition to mitigate increases; with competition, payers and PBMs are able to negotiate with manufacturers, as well as improving clinical outcomes with more choices.”

Unfortunately, if some drugs don’t lose patent protection, Fleming warns there might be double-digit annual price increases. Bradbury also is concerned that the lack of competition in specialty drugs due to patent protection and too few drugs on the market for specific conditions are driving drugs to a higher price point.

Pharmacy benefits: Super-sized, minimized or right-sized?

Simplifying product lines requires business decisions that can improve or decrease product quality, satisfaction and costs. Similarly, employers’ health benefit decisions to streamline choices can impact health care quality, patient satisfaction, work productivity and total healthcare costs. Over the past few years, healthcare benefits and choices have narrowed to manage costs. Thus, the number of in-network providers, pharmacies, and reimbursable treatments has decreased.

Within pharmaceutical benefits, medication choices can be limited using exclusive or restrictive formularies. Exclusive formularies cover only a subset of treatments for a condition. For example, patients who need alternatives excluded from the formulary pay the full cost. Restrictive formularies limit when medications are reimbursed based upon meeting certain criteria, such as liver damage from Hepatitis C treatment.

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 147

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 "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.

Pay-for-performance drug pricing: drugmakers asked to eat costs when products don't deliver

The latest wrinkle in the fight against rising drug prices involves insurers and pharmacy benefit managers asking drugmakers to accept lower prices for the latest medicines emerging from their labs when they don't achieve the desired results.

Insurers like Aetna, Cigna and Harvard Pilgrim Health Care, as well as pharmacy benefit managers such as Express Scripts, are engaging major manufacturers including Novartis, Merck and Astra Zeneca in these risk-based deals because many of the latest blockbusters drugs are lacking long-term benefits data.

In most of the deals, insurers agree to offer reimbursement for a drug at a set price as long as the drugmaker agrees to pay a penalty if certain metrics aren't met. Drugs for combating diabetes, hepatitis C and heart disease are prime targets for the new pricing arrangements, where biomarkers like cholesterol, blood glucose or virus eradication can be used as measurable benchmarks.

Payers say the deals give them assurance that they won't be left holding the bag if a drug doesn't deliver its promised medical benefit. Drugmakers are willing to go along because it helps get their products to more patients more quickly.

"Don't Miss" webinar Tuesday December 13 at 2PM ET

How many businesses do you know want to cut their revenues in half? That's why traditional pharmacy benefit managers don't offer a fiduciary standard and instead opt for hidden cash flow opportunities such as rebate masking. Want to learn more?

A snapshot of what you will learn during this 30 minute webinar:

• Hidden cash flows in the PBM Industry such as formulary steering, rebate masking and differential pricing 
• How to calculate cost of pharmacy benefit manager services or CPBMS
• Specialty pharmacy cost-containment strategies
• The financial impact of actual acquisition cost (AAC) vs. effective acquisition cost (EAC)
• Why mail-order and preferred pharmacy networks may not be the great deal you were sold

See you Tuesday December 13 at 2 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 146

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 "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.

Drugmaker sheds light on path of rebate dollars

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We hear from more and more people living with diabetes about the challenges they face affording healthcare, including the medicines we make. We take this issue seriously and have been thinking about what we can do to better support patients. This has become a responsibility that needs to be shared among all those involved in healthcare and we’re going to do our part.

As a first step, we've taken a position on affordability, outlining three tenets that will be our focus. One is creating more pricing predictability so customers like pharmacy benefit managers (PBMs) and payers can effectively anticipate and budget for our price increases. We will support that by limiting any potential future list price increases for our medicines to no more than single-digit percentages annually. This is one action we are taking immediately.

A second area of focus is transforming the drug pricing system, which is incredibly complex and has resulted in a lot of confusion around what patients pay for medicines. News reports on drug prices have left the public with an impression that companies like ours realize all the profits from the “list price” increases we’ve made over the last decade.

In other words, a list price increase by XX percent leads to an automatic XX percent profit for the drug maker. We believe that is misleading and here’s why: As the manufacturer, we do set the “list price” and have full accountability for those increases.

Integrating pharmacy benefit, medical benefit cuts costs

Managed care executives should attend to the comprehensive management of drugs that are covered on both the pharmacy benefit and medical benefit because both benefits contribute significantly to cost trends, according to one industry expert. 

Figure 1. Stylized Procedure for Using Episode
Groupers to Evaluate Provider Efficiency

Executives should care because specialty drugs used to treat many common chronic conditions are covered under both benefits; managing in the silos sub-optimizes clinical and cost management,” said John Fox, MD, senior medical director at Priority Health, who spoke at an online workshop from the Academy of Managed Care Pharmacy and The Pharmacy Group.

“Further, integration of utilization data, benefits, and management allows application of common principles across all benefit designs regardless of whether or not the drug is covered under the medical benefit, the pharmacy benefit or a separate specialty drug rider,” Fox said.

Top Integration Advantages

• Creation of a single P&T committee

• Guiding principles can be applied across benefits

"Gross" Invoice Cost for Top Selling Generic and Brand Prescription Drugs - Volume 145

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.

[Click to Enlarge]

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.