Thursday, September 13, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 236)

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.

Wednesday, September 12, 2018

The Marriott Rewards Program and Non-Fiduciary PBMs have a lot in common

When the announcement was made last year that Marriott International was purchasing Starwood Hotels and Resorts I was ecstatic. This meant I would have access to more hotel properties, especially internationally, and let's be honest the Starwood properties are just better. The Starwood hotels, at least in my experience, are more up to date and offer superior customer service.

The cynic in me, however, said this is going to be a tricky project [merging the two rewards programs] so I immediately set out to take screen shots of my accounts such as stays, points, and membership levels. One can never be too careful in protecting what they've earned in the digital age. Long story short these screenshots came in handy not too soon after the integration was complete.

On August 18, 2018 the Marriott and Starwoods Preferred Guest rewards programs were finally combined sort of. While the integration of the two programs was taking place in the background, I was learning how the SPG (starwoods preferred guest) program worked. During my research, what I learned shocked me!


Tuesday, September 11, 2018

The Secret Drug Pricing System Middlemen Use to Rake in Millions

Radical transparency in pharmacy benefits management starts
with training and education. Click here to begin yours.
For years, Frahm’s South Side Drug bought pills from distributors, and dispensed prescriptions to the Wapello County jail. In turn, the pharmacy got reimbursed for the drugs by CVS Health Corp., which managed the county’s drug benefits plan.

As he compared the newspaper notice with his own records, and then with the county’s, Frahm saw that for a bottle of generic antipsychotic pills, CVS had billed Wapello County $198.22. But South Side Drug was reimbursed just $5.73.

So why was CVS charging almost $200 for a bottle of pills that it told the pharmacy was worth less than $6? And what was the company doing with the other $192.49?

Tyrone's Commentary:

It's not a secret at least for those who regularly read this blog or follow me on LinkedIn.

Frahm had stumbled across what’s known as spread pricing, where companies like CVS mark up—sometimes dramatically—the difference between the amount they reimburse pharmacies for a drug and the amount they charge their clients.

[Read More]

Monday, September 10, 2018

Health Plan with 495,000 Covered Lives Says Prescription Medications Account For One in Four Dollars Spent

The high prices of individual medications are the subject of frequent media reports. However, overall national pharmaceutical spending has received somewhat less attention because it is considered less relevant for health care cost containment, as it is dwarfed by national spending on hospital care. This may not be the case for commercial payers.

At 25 percent of total health care expenditures in 2016, net spending on pharmaceuticals by Harvard Pilgrim Health Care (HPHC) was consistent with retail pharmaceutical spending proportions of commercial payers across states and considerably higher than 10 percent to 17 percent often reported nationally.
Click to Enlarge
At HPHC, considering only pharmacy benefit spending would fail to account for the 25 percent of medication spending attributable to those medications administered in physicians’ offices and paid under the health plans’ medical benefit—similar to an estimated national 28 percent spending contribution of non-retail medications.

Tyrone's Commentary:

1 in 4 dollars attributed to prescription medications and this doesn't include spend on inpatient HCPCS J Code drugs! Soon the DOJ will approve the mergers of CVS/Aetna and ESI/Cigna. Like Optum and Prime Therapeutics, CVS and ESI want to capitalize on the potential of inpatient medical spend J code drugs. The PBMs will bring with them all of their knowledge and drug utilization management tools which is a great opportunity to improve patient outcomes and contain costs. Unfortunately, it also gives them the chance to add to costs. Because PBMs generally rely on the demands of clients for the level of transparency provided, the scenario which plays out is largely up to plan sponsors and their advisers. When you know better, you do better.

It is noteworthy that our pharmaceutical spending estimates exclude payments for inpatient-administered medications, as those are included in inpatient spending. Consequently, our data understate total pharmaceutical spending.

[READ MORE]

Thursday, September 6, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 235)

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.

Tuesday, September 4, 2018

"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 radical transparency 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. maximum allowable cost (MAC)
  • Why mail-order and preferred pharmacy networks may not be the great deal you were sold

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.

Friday, August 31, 2018

BCBS of Tennessee: Prescription Drugs Have Become the Single Leading Cost Driver

Drug costs accounted for 30.1 percent of what BCBS Tennessee paid out on behalf of members in their insured group plans last year. Just five years ago, this wasn’t the case. Drug costs accounted for 24.1 percent of claims costs for their commercial members in 2012 — meaning drugs have become a bigger slice of an already growing pie. What accounts for this shift? Are Tennesseans taking more drugs? That’s part of the story.

In 2012, the average member received 12 prescriptions per year, and that number grew to 15 per year in 2017. The bigger issue is cost. Drug costs are growing faster than overall medical inflation, which is in turn growing faster than the cost of consumer goods overall. First, we’ve seen a sharp increase in costs for the drugs you pick up at the pharmacy.

Source: America's Health Insurance Plans (AHIP)
Tyrone's Commentary:

PBMs have moved into the medical benefit to manage prescription drug utilization and spend. Despite the trend, most self-funded employers, benefits consultants and brokers spend considerably more time managing the medical benefit (that part which excludes prescription drugs) than the pharmacy benefit. Is it because medical management is a comfort zone and the shift to prescription drugs, as the leading cost driver, requires additional education? More education is a tough sell for a busy professional 50 years of age or older who already has a college degree and professional credential or two. This age group 50+ also just happens to be the demographic with the largest number of covered lives under care. Some have been desensitized to the plight of the employer or patient and care only about the almighty dollar bill. A clear indication money might be most important is when you hear a consultant, CHRO or CFO refer to a covered life as a "belly button," for example. Whatever the reason it's concerning to say the least. Stakeholders, including patients, want more. No scratch that....they need more. Learn how to manage pharmacy benefits like an expert. You will help prolong life or even better help save a life. 

Since 2008, brand name drug inflation has increased 15 times faster than the Consumer Price Index. If you applied the same rate of inflation to a gallon of milk, you’d be spending around $12 instead of $4 or $5. Cost growth is even more pronounced in the medical drug category, where we’re seeing inflation of around 13 percent already in 2018. In other categories of spending, like physician or hospital services, the figures range from six to eight percent.

[Read More]

Thursday, August 30, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 234)

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.

Wednesday, August 29, 2018

Is consolidation in health care good for employers?

Click to Learn More
CVS’s proposed deal with Aetna has received a lot of attention. If the deal goes through, experts believe patients could end up paying more, not less. A company with such leverage will make it challenging for new organizations offering insurance coverage to enter the market and compete.

Furthermore, many employers and other health care purchasers have enjoyed the flexibility of offering medical benefits and pharmaceutical benefits to their members through separate companies. By keeping medical benefits and pharmaceutical benefits separate, employers and other purchasers have been able to shop around, gaining leverage as competitors know prospective customers have multiple choices.

Without the option to offer these benefits separately, purchasers will have to look for which singular health plan offers the best combination of medical and pharmacy benefit management. This might leave them compromising on one to ensure the other meets their needs.

[Read More]

Tuesday, August 28, 2018

Three Ways to Avoid Bankrupting Costs for Medical Spend J Code Drugs

Image result for medical spend j code drugs
Radical transparency in pharmacy benefits management 
starts with training and education. Click here to begin yours.
Well not quite bankrupting costs for companies like Amazon, Berkshire Hathway or JPMorgan Chase, but high enough for each to forgo the status quo and walk a new path together. The challenges associated with specialty drugs requires a whole new playbook, one with collaboration as the organizing principle. Third-party payers must be proactive in working with providers and PBMs, in several areas, to rein in specialty drug spend.

Appropriate sites of care. When it comes to specialty drugs, the driver of total cost is not just in the unit pricing but also in how and where those drugs are administered. Working jointly to steer patients to the most effective sites will boost total effectiveness and help control costs.

Monday, August 27, 2018

Large PBM is staking out million-dollar gene therapies

Image result for us gene therapy market size
Click to Enlarge
Express Scripts Holding Co. built a multi-billion enterprise pressuring drug companies to lower their prices for U.S. patients. Now it is quietly building a side business: getting paid to help drug companies dispense a new generation of high-priced drugs.

Express Scripts is in talks with biotechnology companies Biomarin Pharmaceutical Inc., Spark Therapeutics Inc. and Bluebird Bio Inc. to have its specialty pharmaceutical business exclusively distribute their new hemophilia therapies when they are expected to become available in 2019 and 2020, Chief Medical Officer Steve Miller told Reuters in an interview.

Tyrone's Commentary:

The shift is on! Non-fiduciary PBMs are giving more transparency, on the pharmacy benefit, only to shift [pharmacy] cost to the medical benefit. Vertically integrated carriers are preaching the benefits of their business models and in some cases rightfully so. But, if integrating the medical and pharmacy benefit requires that you relinquish flexibility and cost controls, the disadvantages of integration far outweigh the advantages. Disadvantages may include:
  1. Plan members may pay U&C (usual and customary) prices, which are higher than discounted prices
  2. Formulary and rebate arrangements may not be available or are significantly limited
  3. Plan sponsors lack authority and flexibility and are typically unable to adjudicate plan limitations, plan exclusions, enforce generic dispensing mandates or validate appropriate drug pricing
Biomarin, Spark and Bluebird confirmed to Reuters that they were speaking to payers, a group generally defined as pharmacy benefit managers, health plans and government agencies, about pricing models for future therapies. Analysts project those drugs could top $1 million to $1.5 million in price.

Rather than rail against the drugs’ expected high prices, Miller echoes the familiar drug company argument that the potentially curative therapies will likely be worth the high cost if they supplant the hundreds of thousands of dollars in annual medical costs to treat ailments such as hemophilia, which affects about 20,000 people in the United States alone.

[Read More]

Thursday, August 23, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 233)

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.

Wednesday, August 22, 2018

Auditor’s Report: Pharmacy Benefit Managers Take Fees of 31% on Generic Drugs Worth $208M in One-Year Period

Radical transparency in pharmacy benefits management 
starts with training and education. Click here to begin yours.
Ohio's Pharmacy Benefit Managers (PBMs) charged the state a “spread” of more than 31 percent for generic drugs – nearly four times as much as the previously reported average spread across all drugs, according to a new report by Ohio Auditor of State Dave Yost.

An analysis conducted by Auditor Yost’s staff found PBMs collected $208 million in fees on generic Medicaid prescriptions, or 31.4 percent of the $662.7 million paid by managed care plans on generics during the one-year period April 1, 2017 through March 31, 2018.

The Auditor’s review, conducted at the request of state lawmakers, largely confirmed the findings of a private consultant hired by the Ohio Department of Medicaid to examine the state’s system of managing its pharmacy plan. Specifically, lawmakers wanted to know how much PBMs are paid through the “spread” – which is the difference between what the state’s managed care plans pay the PBMs and what the PBMs pay pharmacies to dispense drugs.

Tyrone's Commentary:

On the heels of terminating two large PBM contracts, the State Auditor of Ohio released this bombshell report detailing the financials which prompted terminating said contracts. Why do you think Chase Bank, Amazon and Berkshire Hathaway have taken matters into their own hands? Self-insured employers must first make sure all vendors and advisers interests are perfectly aligned to theirs. Second, get self-educated AND (not or) hire an expert with a proven track record whose interests too are perfectly aligned. I can assure you these qualifications makes the list of qualified candidates much smaller than you think. The bottom line - trailing public entities in how you manage pharmacy benefits is no longer sustainable.

“The more we learn, the more troubling this becomes,” Yost said. “Our review has answered many of the questions presented by state lawmakers, but the lack of information from the PBMs limits the depth of our work. Without more information – on what’s happened in the past and what is planned for the future – Ohioans will never know if they’re getting a fair price. They deserve an accurate accounting of this work.”

[Read More]

Thursday, August 16, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 232)

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.

Wednesday, August 15, 2018

Ohio Medicaid pulls the plug on contracts with two big PBMs over ‘spread’ pricing

In the June 26, 2018 blog post, "What is a fair share? Pharmacy middlemen made $223.7M from Ohio Medicaid" I challenged plan sponsors to not be distracted by large AWP discounts or substantial gains from guaranteed rebate dollars.

Cost-Effective Pharmacy Benefits Management Begins 
and Ends with Education. Click Here to Begin Yours.
Instead, I argued, it is more important to understand the cost of your PBM service or how much you pay the PBM for the services it provides. This fee is hidden in your final plan cost and is not the administrative fee! It is the savings (less a reasonable administrative fee) the non-fiduciary PBM negotiated on your behalf but did not pass all of it back to you. 

For the first time Ohio Medicaid did exactly that and what it discovered was enough to terminate their PBM contracts with Optum and CVS Health. The department on Tuesday directed Ohio’s managed care plans to terminate contracts with pharmacy benefit managers, or PBMs, based on the “spread pricing” practice, The Columbus Dispatch reported. The state said it’s moving to a more transparent pass-through pricing model Jan. 1.

Under that model, PBMs would receive administrative fees and must bill the state the same amount they pay pharmacists. “The black box will effectively be eliminated,” said Patrick Stephan, the department’s director of managed care. A state-commissioned report showed PBMs billed taxpayers $223.7 million more for prescription drugs in a year than they reimbursed pharmacies to fill those prescriptions.

Friday, August 10, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 231)

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.

Wednesday, August 8, 2018

Secret discounts paid by drugmakers to pharmacy benefit managers are going away so now what?

Source: Berkley Research Group and IMS Quintiles
Pfizer Inc. CEO Ian Read said on Tuesday July 31, 2018, "drugmakers will likely get rid of secret discounts to middlemen that have become a focus of the U.S. drug-cost debate." What are these secret discounts and who are these middlemen to whom Ian Read is referring?

Rebates are secret discounts drugmakers use to compete for coveted spots on pharmacy benefit managers’ formularies or lists of covered drugs. The intent of these discounts is to help lower overall drug costs for third-party payers and patients.

Middlemen who negotiate drug rebates on behalf of employers and health plans but hide rebate revenue are called non-fiduciary pharmacy benefit managers or NFPBMs. Whether or not rebates, as a hidden cash flow, completely go away or how long it will take for drugmakers to get rid of them is unclear.

Let's not be naive. If rebates go away do you believe for one second CVS Health's or Optum's PBM revenues will decline? Not a chance as they will shift your costs elsewhere. Here's a look at some of the ways non-fiduciary PBMs will grow revenue despite the elimination of rebates.

Tuesday, August 7, 2018

"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 radical transparency 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. maximum allowable cost (MAC)
  • Why mail-order and preferred pharmacy networks may not be the great deal you were sold

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.

Thursday, August 2, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 230)

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.

Tuesday, July 31, 2018

FDA Biosimilar Plan Offers Employers Saving Strategy Solution

Image result for list of biosimilar drugs
List of Biosimilar Drugs and their Marketing Status
(Updated September 14, 2017)
In 2017, biosimilars generated $3 billion worldwide in revenue and present growing market competition to the specialty biotech market. Escalating specialty drug costs present a challenge for many employers who struggle to balance health care spend with business financial livelihood.

Based on 2017 FDA research, the delayed market launch of nine biosimilars represented $4.5 billion in potential savings. As part of the FDA Biosimilar Action Plan, biosimilar drugs are poised to offer a solution that could help deliver significant cost advantages without compromising therapeutic efficacy, safety, or quality. 

Biosimilars are biologic drugs that are highly similar in structure and function to existing FDA approved reference drugs. With fully established FDA safety and efficacy data, reference drugs are used as the benchmark to which biosimilars are compared to.

For example, Neupogen is the reference drug for both biosimilar products Zarxio and Granix. Biosimilars must demonstrate no clinically meaningful efficacy differences and equal safety to gain FDA approval. Biosimilars should not be viewed as generic drugs, but rather an alternative form of brand medications that would usually be categorized as specialty.

Monday, July 30, 2018

Meet the Rebate, the New Villain of High Drug Prices

A growing chorus, including the Trump administration, is calling for a rethinking of after-the-fact drug discounts that some say contribute to rising prices.

Image result for net to gross rebatesAn increasingly popular culprit in the debate over high drug prices is the pharmaceutical rebate, the after-the-fact discounts that form the heart of the nation’s arcane — many would say broken — market for prescription drugs.

Tyrone's Commentary:

My thoughts on rebates are well-documented throughout this blog. Do a quick search to read any number of related posts. The bottom line is plan sponsors are entitled to every penny a manufacturer pays to a PBM for a drug put on its formulary and for some drugs dispensed on the medical side. Most plan sponsors believe they are getting 90% or more of the rebates back but in many cases the actual number is far less. 

Now, a growing chorus wants to get rid of them, or at least change the way they are applied after drug companies have already set their prices. Rebates, critics say, have pushed up the list price of brand-name drugs, which consumers are increasingly responsible for paying. Insurers generally get to keep the rebates without passing them along to their members.

Last week, the drug industry’s largest trade group, the Pharmaceutical Research and Manufacturers of America, took aim at the rebate system, proposing a change to the way middlemen handle rebates, and how those companies are paid.

[Read More]

Friday, July 27, 2018

Million-dollar+ medical claims increase 87 percent from 2014-2017: Sun Life report

Image result for million dollar medical claimsDrug costs account for much of the rise in medical expenses; prescription drug plans can make up from 18% to 25% of total healthcare costs, according to a PwC report. And for specialty drugs, the percentage can rise as much as 30%. Employers can reap some of the savings through rebates and discounts from pharmacy benefit managers (PBMs). Savings, however, are mostly on brand-name drugs, rather than less costly generic drugs.

Some proposals for saving on drug and medical costs include: conducting clinical reviews of drug formularies; eliminating unnecessary or low-value medical procedures; and offering account-based health plans (ABHPs) with health savings accounts (HSAs), strategies attributed to "high-performing" organizations, according to a Willis Towers Watson study released in March.

The industry has seen a number of big moves, company-wise, in the pharmaceutical space in recent months, including CVS's deal to buy Aetna — a move that experts say could force employers to rethink common assumptions about how they purchase prescription drug benefits. Amazon, also, recently made headlines for its purchase of PillPack, an online pharmacy offering home delivery.

[Read More]

Thursday, July 26, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 229)

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.

Tuesday, July 24, 2018

The Bezos-Buffett-Dimon health care venture: Eliminate the middlemen

Click to Learn More
Lately, the big pharmaceutical firms have pointed at PBMs to deflect the blame for their sky-high drug prices. President Donald Trump seems to share this view. However, PBMs are just middlemen whose only purpose is to lubricate the relationship between insurers, Big Pharma and pharmacy chains. They let pharmacies know what your plan covers and what you owe – a valuable service worth a nominal payment.

But PBMs also work the system by collecting rebates of up to 25 percent from drug manufacturers as an agent for insurers. They then pass some, but not all, of them on to the insurance companies and their customers. We believe these rebates should be understood for what they really are: bribes that Big Pharma pays in an attempt to bias insurers to favor their higher-priced products over others.

Tyrone's Commentary:

Discounts off AWP, guaranteed rebate dollars per eligible claim or low administrative fees are simply a means to an end. The most important number to calculate is your PBM service fee. It is determined, in large part, on how adept a plan sponsor is at uncovering hidden PBM cash flows. If you're a self-funded employer, broker or consultant who still determines whether or not you won fair pricing based primarily on AWP discounts or guaranteed rebate dollars you're mired in the status quo thus are vulnerable to excessive overpayments. Those self-funded employers who demand full disclosure of PBM service fees and will not accept anything less are doing exceptional work. Uncovering PBM service fees allow you maybe for the first time to see how much your PBM service actually costs which is not the same as your pharmacy plan costs. Hidden in your pharmacy plan cost is the PBM service fee. It's time to start pulling this number out.  

Insurers are not blameless. They also try to buy business, creating unnecessary transaction costs in the process. For instance, employers typically hire brokers and consultants to advise them on coverage for their employees. Given the complexity of insurance plans, seeking such help is usually a rational decision.

But the hidden fact is that these middlemen, in addition to fees from their clients, are taking side payments from insurers up to 16 percent of the premium – clearly designed to bias their recommendations to employers. These payments are another case of unproductive transactions costs that can be eliminated by bargaining directly with insurers and drug companies.

[Read More]

Monday, July 23, 2018

Department of Health and Human Services (HHS) Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs

Click to Learn More
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of the Secretary
RIN 0991-ZA49
AGENCY: Department of Health and Human Services.
ACTION: Policy Statement; Request for information.
SUMMARY: Through this request for information, HHS seeks comment from interested parties to help shape future policy development and agency action.

Fiduciary duty for Pharmacy Benefit Managers. Pharmacy Benefit Managers (PBMs) and benefits consultants help buyers (insurers, large employers) seek rebates intended to lower net drug prices, and help sellers (drug manufacturers) pay rebates to secure placement on health plan formularies. Most current PBM contracts may allow them to retain a percentage of the rebate collected and other administrative or service fees. 

Do PBM rebates and fees based on the percentage of the list price create an incentive to favor higher list prices (and the potential for higher rebates) rather than lower prices? Do higher rebates encourage benefits consultants who represent payers to focus on high rebates instead of low net cost? Do payers manage formularies favoring benefit designs that yield higher rebates rather than lower net drug costs? How are beneficiaries negatively impacted by incentives across the benefits landscape (manufacturer, wholesaler, retailer, PBM, consultants and insurers) that favor higher list prices? How can these incentives be reset to prioritize lower out of pocket costs for consumers, better adherence and improved outcomes for patients? What data would support or refute the premise described above?

Tyrone's Commentary:

PBMs will provide disclosure of important contract details to a level demanded by the competitive market and generally rely on the demands from clients for delivering radical transparency in their contracts. 
In other words, PBMs have learned how to leverage the purchasing power of the unsophisticated plan sponsor to their financial advantage. The truth is most, if not all, of the excessive costs embedded in non-fiduciary PBM service agreements can be eliminated if stakeholders (HR execs, CFOs, benefits consultants, brokers etc...) concern themselves less with self-preservation and more with self-education

Should PBMs be obligated to act solely in the interest of the entity for whom they are managing pharmaceutical benefits? Should PBMs be forbidden from receiving any payment or remuneration from manufacturers, and should PBM contracts be forbidden from including rebates or fees calculated as a percentage of list prices? What effect would imposing this fiduciary duty on PBMs on behalf of the ultimate payer (i.e., consumers) have on PBMs’ ability to negotiate drug prices? How could this affect manufacturer pricing behavior, insurance, and benefit design? What unintended consequences for beneficiary out-of-pocket spending and Federal health program spending could result from these changes?

Thursday, July 19, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 228)

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.

Wednesday, July 18, 2018

Amazon’s PillPack deal puts PBMs, advisers on notice

Image result for amazon pillpack
Learn More:  How to become a Certified Pharmacy Benefits Specialist
Insurance industry leaders predict the way medications are purchased today could come to an end in the next five years, potentially doing away with pharmacy benefit managers and how benefit brokers work with insurance product sales.

That new healthcare landscape may emerge in the wake of Amazon’s purchase of the online prescription drug company PillPack, which was announced last week. The deal — which gives the online retail giant the infrastructure to deliver prescription medications in the U.S. — could potentially make redundant middlemen such as PBMs and even some benefit advisers from the healthcare industry.

Tyrone's Commentary:

Those who believe this is the end for PBMs are being myopic. One, Amazon was in the mail-order pharmacy business a few years back, with drugstore.com, and failed. Sure they've learned from this failure. But, the point is it isn't easy nor a forgone conclusion the PillPack acquisition alone will serve as a catalyst for widespread cuts in pharmacy costs. Second, PBMs offer a valuable service and as a result PBMs who offer radical transparency will survive. Naysayers who say this is the end for all PBMs don't fully understand all the services a PBM offers nor the impact of those services. One thing is for sure, if Amazon is successful it will force non-fiduciary PBMs to become much more efficient.

Rob Piazza, product manager, analytics, at Benefitfocus, says payers and PBMs had many chances to work together in the past to better control rising drug costs, but they did not do enough.

[Read More]

Monday, July 16, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 227)

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.

Thursday, July 12, 2018

IFEBP provides tips on managing specialty drugs

The retail price of specialty drugs increased by almost 10 percent in 2015, following nine years of increases, according a study from the AARP. In the report, No Magic Pill to Cure Specialty Drug Costs (But Some Preventive Measures), the International Foundation of Employee Benefit Plans (IFEBP) provided tips for employers to help manage the cost of specialty medications.

The IFEBP provided the following tips:

1)  Change where specialty drugs are administered (called site of care). Having the patient go to a clinic or the doctor’s office increases costs. Could the drug be self-administered at home? Or, if someone must administer the drug to the patient, could it be done via a less costly home care service?

2)  Review the pharmacy benefit manager (PBM) contract. Look for inconsistent definitions. Ensure the PBM passes all rebates on to the employer plan.

3)  Refer participants to patient and copayment assistance programs to receive financial help.

[Read More]

Thursday, July 5, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 226)

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.

Tuesday, July 3, 2018

Clawbacks: Settling the score with non-fiduciary pharmacy benefit managers

Click to Learn More
This billing practice is known as a “clawback” and you may have no idea it’s happening to your employees or how it impacts your pharmacy costs. Furthermore, pharmacists aren't allowed to tell patients, under a gag order, that restricts pharmacists from telling patients they are being
overcharged.

These clawback monies are a contributing factor to the unchecked service fees non-fiduciary PBMs rely upon to cover overhead.

Tyrone's Commentary:

It’s all about the contract. 

1) Demand radical transparency
2) Negotiate financial and nonfinancial contracting terms for both direct and indirect revenues
3) Get educated

[Read More]

Thursday, June 28, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 225)

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.

Tuesday, June 26, 2018

What is a fair share? Pharmacy middlemen made $223.7M from Ohio Medicaid

The middlemen, called pharmacy benefits managers, are under scrutiny for how transparent they are in how the public money gets spent. The new report shows the companies retained $223.7 million last year of the money they billed Medicaid.

CVS Caremark, with the same parent company as CVS retail pharmacies, manages pharmacy benefits for four of the five Medicaid managed care companies. Last year it kept 8.7 percent or the payments it received, or $197.3 million. OptumRx does work for the other insurer and kept 9.4 percent, or $26.4 million.

Tyrone's Commentary:

Finally, someone is tackling a critical issue that too often gets tabled. I've been trying to bring PBM service fees (watch video below) to the mainstream for six years! The one question I have is why are public sector managers leading the charge?

6-Minute Video: Click to Learn More
I don't know the answer to that question but I do know the public sector is better at managing pharmacy costs than are commercial payers and that my loyal readers is a problem. Worst case scenario, it may very well be a dereliction of fiduciary duty by CFOs and HR Execs.

Greg Moody, the director of the Ohio Department of Health Transformation, which oversees Ohio Medicaid, said Ohio needs more information before it determines what is a fair share for the pharmacy benefit managers.

“At this stage we’re not saying that’s too high or too low,” Moody said. “What we’re saying is this is information we’ve never had before. And now the state, the managed care plans, the pharmacies have more information to make their argument and determine if that number is too high or too low or what should happen next.”

[Read More]