Unaccountable Benefit Managers: How PBMs Put Profits Over Patients

Some commentary from the LinkedIn post

A young husband was diagnosed with advanced melanoma and tumors attached to his brain. Waiting on the other side of his oncology clinic’s pharmacy counter was a potentially life-prolonging drug. But his Pharmacy Benefit Manager pumped the brakes, instead requiring that he and his wife order the medication from the mail-order pharmacy owned by that PBM — and submit a $1,000 co-pay.

By the time his wife was able to procure co-pay assistance, the young man could no longer swallow pills and passed away in the ICU. Medication that was critical to treating his cancer remained just on the other side of the clinic’s pharmacy counter, with access denied by the couple’s PBM.

It’s a heartbreaking story. Patients should never be delayed or denied access to needed care. But such instances are becoming more common because of large PBMs — powerful middlemen that manage health care benefits for more than 260 million Americans. PBMs decide what drugs are covered by insurance, how much they should cost, and how they get into patients’ hands.

Pharmaceutical manufacturer drug coupons days may be numbered

Companies have previously tried blocking the use of co-pay coupons for certain medications and at certain pharmacies. But the latest approaches have taken a very different tack by instead taking advantage of the coupons, just not to the benefit of consumer out-of-pocket costs.

New programs offered by pharmacy benefit managers seem poised to take off industry-wide. The most promising program targets high-cost specialty drugs, using the co-pay coupon to offset the drug’s total cost instead of the consumer’s co-pay. Pharmacy-benefit managers are able to do this, and to offer the program for free, by requiring that health plans exclusively deal with a certain specialty drug pharmacy.

Before the program, a patient using a coupon would very quickly meet her health plan’s out-of-pocket requirements, at which point the coupon would no longer be necessary.

Under the change, however, the coupon could be used many more times and the patient would pay more out of pocket, making the co-pay coupon more expensive for the drug maker and reducing the health plan’s total drug costs by an estimated 1% to 3%.

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 177)

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.

Large group employers are currently struggling to afford specialty drugs

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Specialty drugs have significantly changed the healthcare world and provide value to patients with previously incurable diseases. While these drugs improve treatment, they come with a large price tag, with specialty spending expected to reach $400 billion within the next 3 years.

Results from a large survey conducted by Anthem, Inc and C + R Research suggest that large group employers are currently struggling to afford specialty drugs and they are using unconnected tools and techniques to manage the trend.

Included were 303 large group employers surveyed between December 2015 and January 2016.

The authors discovered that the costs of new specialty drugs were the most concerning to employers, with 90% reporting that the costs were “somewhat challenging” or “very challenging,” according to the survey.

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 176)

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.

This story should terrify the employee benefits and PBM industries

Table 1: Click to Enlarge

Over-the-top or OTT is a term used in broadcasting which refers to video and other media transmitted via the Internet, as a standalone product, without a cable or satellite operator controlling the distribution of content. Over-the-top content has lead to a new phenomenon often referred to as cord cutting.

Cord cutting is the practice of canceling or forgoing a cable television subscription or landline telephone connection in favor of an alternative Internet-based or wireless service. Cord cutting started picking up steam in 2016 when 1.9 million pay-TV customers abandoned the service, according to an estimate from SNL Kagan. 

But that's just the tip of the iceberg. The research group expects 10.8 million more customers to cut the cord over the next five years, with total subscribers falling to 82.3 million.

I know what you're thinking, "Tyrone what does OTT, cord cutting and all the other mumbo jumbo have to do with pharmacy benefits management? Stay with me it will all make sense shortly.

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 175)

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.

"Don't Miss" Webinar: How to Slash PBM Service Costs, up to 50%, Without Changing Vendors or Benefit Levels

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?

Here is what some participants have said about the webinar.

"Thank you Tyrone. Nice job, good information." David Stoots, AVP

"Thank you! Awesome presentation." Mallory Nelson, PharmD

"Thank you Tyrone for this informative meeting." David Wachtel, VP

"...Great presentation! I had our two partners on the presentation as well. Very informative." Nolan Waterfall, Agent/Benefits Specialist

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)



Recertification Credit Hours: 2

• Why mail-order and preferred pharmacy networks may not be the great deal you were sold

See you Tuesday July 11 at 2 PM ET!

Sincerely,
TransparentRx
Tyrone D. Squires, MBA  
3960 Howard Hughes Pkwy., Suite 500  
Las Vegas, NV 89169  
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.

Kaleo fires back at Express Scripts, claiming it’s owed at least $5.3M

Depending on which company you ask, one owes the other millions of dollars in a dispute between small drugmaker Kaleo Pharma and top pharmacy benefit manager Express Scripts.

After Express Scripts last month filed a suit alleging Kaleo owes $14.5 million in unpaid rebates, Kaleo has filed a countersuit saying it overpaid the PBM giant by $5.3 million.

Kaleo’s suit claims it overpaid due to “opaque and convoluted invoices” from Express Scripts.

Click to Learn More

Further, Kaleo says, it paid administrative fees to the PBM giant only to see patient access to its overdose med Evzio restricted. Both actions amount to violations of contractual obligations, the drugmaker argues.

In its filing, Kaleo takes a page out of the industry playbook to accuse PBMs of causing high prices by demanding rebates that pad their bottom lines. In the suit, Kaleo argues Express Scripts “extracts excessive fees and ‘rebates’ from pharmaceutical manufacturers like Kaleo to drive up its own profits while providing little, if anything, of value to the pharmaceutical supply chain.”

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 174)

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.

Learned Helplessness: The Biggest Reason Non-Fiduciary PBMs Getaway with Overbilling

Learned helplessness is a state of mind created when a person or group of people rely on something so heavily that they stop thinking critically for themselves. TransparentRx recently participated in a PBM finalist presentation for a self-funded employer and during the open discussion, I posed a question to their staff pharmacist who was part of the decision-making team.

Table 1: Scores from a Very Basic
Pharmacy Benefits Quiz

Keep in mind this is a fairly large corporation with more than 5000 employees. I asked the pharmacist was there a reason why they didn't have a customized formulary? A representative from their third-party administrator (TPA) quickly chimed in and responded with, "we use the incumbent PBMs formulary but with edits."

I pushed back with, "does it make sense that you allow a non-fiduciary PBM to control your formulary when it stands to benefit from how it is ultimately managed?" It is at this point when the pharmacist made a startling comment. The response to my question was, "we don't have a customized formulary because we don't have a P&T committee."

Here is the problem with that statement. No third-party payer requires an in-house P&T committee in order to take advantage of a customized formulary. There are reputable companies who specialize in formulary build-out and subsequent management of the formulary who may also maintain a P&T committee. Because these companies don't stand to benefit from any rebate dollars, their primary focus is drug efficacy, safety and cost-effectiveness not what's in it for them.

The decision to include a drug on a drug formulary is a process that considers such factors as efficacy, safety and cost-effectiveness. In managed health care plans, formularies are generally developed and maintained by a pharmacy and therapeutics (P&T) committee. The job of a P&T committee is to identify those products that are most medically appropriate and cost-effective. Overall, the P&T committee is tasked with determining what drug treatments best serve interests of a given patient population.

Maryland Is First to Ban “Price Gouging” on Generic Drugs, but Other State and Federal Initiatives May Soon Follow

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On May 26, 2017, Maryland became the first state to ban pharmaceutical “price gouging” on certain prescription drugs made available for sale in the state. Amidst overwhelming bipartisan support from both the House of Delegates (137-2-2) and the State Senate (38-7-2), Maryland Governor Larry Hogan allowed House Bill 631, also known as the “Prohibition Against Price Gouging for Essential Off-Patent or Generic Drugs” (“Act”), to become law without his signature.

The Act, which takes effect on October 1, 2017, has two key provisions: (1) a prohibition on price gouging on certain drugs and (2) the authorization of administrative and legal action by the Maryland Attorney General (“MD AG”) to enforce this new law.

The first key provision of the Act (to be codified in Maryland Code Health-General as  Section 2-802) prohibits manufacturers and wholesale distributors from engaging in “price gouging” when selling “essential off-patent or generic drug[s].” An “essential off-patent or generic drug” is any drug or drug-device combination that:

• is not subject to exclusive marketing rights, 
• is listed on the most recent World Health Organization Model List of Essential Medicines or indicated by the Maryland Secretary of Health and Mental Hygiene, 
• is actively manufactured and marketed in the United States by fewer than three manufacturers, and 
• is made available for sale in Maryland

According to the Act, “price gouging” is an “unconscionable increase in the price of a prescription drug.” An “unconscionable increase” is defined as an increase that is “excessive and not justified” by costs associated with production or access to the drug for public health promotion and results in prescribed consumers lacking “meaningful choice” due to personal necessity and inadequate competition in the market.