Thursday, November 15, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 245)

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, November 14, 2018

Achievement is Significant But Comes with a Huge Price Tag: New Regulation Requires Regulatory Oversight of Pharmacy Benefit Managers (“PBMs”)

Click to Enlarge
This achievement is bittersweet so allow me to provide the back story. Approximately four years ago, we applied to the Nevada Division of Insurance, our home state, to become a continuing education service provider.

A primary benefit of being certified in our home state is reciprocity. This means approval by our home state would be recognized by every other state in the country without having to go through the full application process within those states. Reciprocity reduces cost and significantly reduces the administrative burden. We assumed getting approved as a CE (continuing education) provider in the same state for which we are domiciled was a no-brainer until it wasn't!

Because the state of Nevada didn't regulate PBMs, TransparentRx's initial application to become a CE provider was not approved. Those of you familiar with these sorts of applications know that you can't just try once and give up. You must push through and sometimes that requires educating or partnering with the entity who has the final say so.

Thursday, November 8, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 244)

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, November 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.

Tuesday, November 6, 2018

Unless Your Company Has Money to Burn Don't Ignore These 7 PBM Contract Pitfalls

One of the first questions I often get during a new consulting assignment centers around cost data. More specifically, analyzing the cost of one proposal against that of another PBM vendor. When this happens I know there could be some trouble ahead for our partnership.

Where costs are concerned, I'm most concerned with whether or not rebates, discount rates and dispensing fees are competitive. It takes all of 30 minutes to compare these data points among 5 to 7 competing PBM vendors. Once I know pricing is competitive my attention turns to the contract. You see PBMs don't set prices they negotiate for better pricing which is different than setting prices. All bets are off if the PBM repackages directly via a mail-order pharmacy or indirectly through say a national chain of retail pharmacies. More about this later.

During Bill Clinton's 1992 successful presidential campaign, James Carville coined the phrase "It's the economy, stupid!" For our purposes and stealing a page from James Carville, "It's the contract, stupid!" All kidding aside, the contract will determine what you ultimately pay so in a sense words matter more than numbers.

Here are seven PBM contract pitfalls you should not ignore.

1. Begin procurement at least six months before the renewal date to put your company in the best position to drive a hard bargain. The first day of procurement starts when you've sent the RFI notification letter not when you're just talking about renewal. Don't wait too long before you begin procurement. Incumbent PBMs and other stakeholders love it when the process is rushed. The reasons should be obvious.

Thursday, November 1, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 243)

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, October 30, 2018

Most employers (60%) aren't tracking wasteful healthcare spending

Related image
Breakdown of the sources of health care wasteful pending
Most employers are not collecting or analyzing data to track unnecessary healthcare spending, even though they see waste as a problem, according to the survey from National Alliance of Healthcare Purchaser Coalitions.

Healthcare is estimated to waste more than $750 billion annually, and respondents said they view this is a problem. More than half of them  (57 percent) said they believe up to 25 percent of treatments employees and dependents receive are unnecessary.

The survey involved 126 U.S. employers in several industries, including manufacturing, education, financial services and healthcare. For the purposes of the survey, waste was defined as "procedures and treatments that are overused, have limited effectiveness, and/or are repetitive to tests and procedures that have already been conducted."

Four findings:

1. A majority of survey respondents (59%) don’t collect and analyze data in order to track waste. 

2. One-third of employers in the survery (34%) farm out that task to at least one vendor (such as a pharmacy benefits manager, a health plan, or a consultant). 

3. Only 7% of those surveyed said their organization tracks waste internally.

4. Respondents cited medical imaging, specialty drugs, prescription medications and  clinical tests as the largest contributors to waste.

Tyrone's Commentary:

A critical component to eliminating wasteful Rx spending is a leadership-instilled culture of learning. A learning employer is stewarded by leadership committed to a culture of teamwork, collaboration and adaptability in support of continuous learning as a core aim

In a learning culture the employer takes ownership and doesn't kick the can down the road. Complex PBM operations and processes are constantly refined through ongoing team training and skill building, systems analysis and information development, and creation of the feedback loops for continuous learning and system improvement. 

Friday, October 26, 2018

PepsiCo and ExxonMobil Team Up with Express Scripts to Create Pharmacy Benefit Design for Radical Transparency and Greater Performance Accountability

Hidden cash flows to non-fiduciary PBMs make up for artificially low administrative fees
It seems the NDPC has fixed this problem have you?

The National Drug Purchasing Coalition (NDPC), an employer-led coalition, is announcing the Total Performance Management solution for its members: a transformative new way for employers to provide pharmacy benefits that guarantees pricing transparency, alignment on outcomes, and accountability for performance.

Express Scripts worked closely with the NDPC to develop the innovative solution. NDPC member companies include PepsiCo, Inc.; ExxonMobil; Chevron Corporation; Sodexo; Yum! Brands, Inc.; Solvay USA Inc., and others.

The Total Performance Management offering is a novel pharmacy benefit model providing employers with more transparency to the true costs of prescription medications, alignment with Express Scripts on clinical, service, and financial performance goals for the plan, and accountability from Express Scripts for delivering on those goals.

The new model has two areas of focus:
  • Pay-for-performance for clinical and administrative plan management that improves patient and plan outcomes. Pay-for-performance means Express Scripts will take on more risk from clients, and be rewarded only when it delivers on agreed-to commitments.
  • Clients pay what Express Scripts pays for prescription drugs plus administrative fees ensuring clients have the transparency they want. By adding clarity to costs, our clients will have a more direct line of sight to the true cost of drugs net of all manufacturer discounts, rebates and incentives.
Tyrone's Commentary:

It's about time! However, the model isn't new so don't be fooled by the marketing spin. Nonetheless, it is the right thing to do and for that I must applaud both NDPC and Express Scripts. NDPC should be credited for demanding radical transparency and Express Scripts for delivering on plan sponsor requirements for more transparency. Three things the coalition must execute on now that radical transparency is seemingly in their grasp:
  1. Continuously monitor PBM performance which goes far beyond standard or ad hoc reports.
  2. Not allow Express Scripts to clawback lost revenues by overcharging for standard or ancillary services.
  3. Prevent Express Scripts from shifting costs to the medical pharmacy spend. I don't know if Express Scripts makes this deal if not for the merger with Cigna.

Thursday, October 25, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 242)

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, October 23, 2018

UnitedHealth has bought another billion-dollar pharmacy business

UnitedHealth Group Inc.’s Optum business has disclosed it bought Avella Specialty Pharmacy, a previously unannounced deal that closed in the third quarter. The Minnetonka-based health care giant revealed the acquisition in an earnings announcement Tuesday.

Phoenix-based Avella distributes specialty drugs, which typically are high-cost and treat complex conditions. UnitedHealth didn’t disclose terms of the deal, which will bring Avella under the umbrella of the United's OptumRx pharmacy-benefits unit.

Source: Statista

The deal was OptumRx’s second acquisition in recent months. It also bought Renton, Wash.-based Genoa Healthcare, which operates pharmacies inside mental-health centers and provides telepsychiatry services.

Avella generated about $1.4 billion in revenue from prescription drugs last year, up 6 percent from a year earlier, according to Drug Channels Institute research. It had roughly 700 employees as of 2016, according to the Phoenix Business Journal.

[Read More]

Thursday, October 18, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 241)

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.

Monday, October 15, 2018

Another big PBM has confirmed it's primary objective isn't to contain prescription drug costs

It is no secret that non-fiduciary pharmacy benefit managers will generally rely on the demands of clients, both current and prospective, for the level of transparency and disclosure it will provide. Express Scripts confirmed as much in the 60 minutes episode The Problem with Prescription Drug Prices by stating and I quote, "it is not contractually obligated to contain costs." If you haven't watched the 60 minutes episode you can read the transcript here.

Now CVS Health has admitted as much as well. In its Q2 2018 earnings call CVS Health writes, "We underwrite contracts to overall level of profitability and many levers available to pull, depending upon the preferences of the client." In layman's terms here is what that means...

CVS HEALTH WILL GENERATE AS MUCH REVENUE AS POSSIBLE AND HOW MUCH WE ARE ABLE TO GENERATE WILL DEPEND LARGELY ON HOW SOPHISTICATED OR UNSOPHISTICATED OUR CLIENTS MIGHT BE.

Non-fiduciary PBMs are couting on two things from self-insured employers:

Thursday, October 11, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 240)

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, October 4, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 239)

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, October 3, 2018

A Tough Negotiator Proves Employers Can Bargain Down Health Care Prices

Radical transparency in pharmacy benefits management
starts with training and education. Click here to begin yours.
Marilyn Bartlett took a deep breath, drew herself up to her full 5 feet and a smidge, and told the assembled handful of Montana officials that she had a radical strategy to bail out the state's foundering benefit plan for its 30,000 employees and their families.

The officials were listening. Their health plan was going broke, with losses that could top $50 million in just a few years. It needed a savior, but none of the applicants to be its new administrator had wowed them.

Now here was a self-described pushy 64-year-old grandmother interviewing for the job. Bartlett came with some unique qualifications. She'd just spent 13 years on the insurance industry side, first as a controller for a Blue Cross Blue Shield plan, then as the chief financial officer for a company that administered benefits. She was a potent combination of irreverent and nerdy, a certified public accountant whose Smart car's license plate reads "DR CR," the Latin abbreviations for "debit" and "credit."

Tyrone's Takeaways:

1)  Self-funded employers don't know what they don't know thus put too much trust in those who purport to have "the" solution but are really most interested in padding their own pockets.

2)  If you're a plan sponsor, get someone on your side who puts you first contractually not just lip service. This person must also have P&L responsibility experience from the other side (i.e. health plan, PBM or drugmaker) or at the very least trained by someone who has the requisite qualifications.

3)  Don't settle for anything less than radical transparency, Marilyn didn't.

4)  The more sophisticated you are as a purchaser the less you pay without cutting benefits to employees or raising their cost share. 

5) A co-op or coalition aren't always the better deal. They often leverage the purchasing power of members for their own financial advantage.

6) I would like to buy Marilyn Bartlett a beer. Marilyn if you're reading this call a brotha!

Health plans contract with separate companies, middlemen entities known as pharmacy benefit managers, to get members their medication. And everyone assured Bartlett the state's pharmacy benefits deal was "state of the art." But just like with Cigna, she insisted on examining it herself.

That wasn't easy because the pharmacy benefits were run through a cooperative arrangement with other health plans, including those of universities, school trusts and counties. The state plan anchored the co-op, and the other partners were happy with the arrangement.

Bartlett knew that pharmacy benefit managers are notorious for including deals that boost their profits at the expense of employers. One of the common tricks is called the "spread." A pharmacy benefit manager, for example, will tell an employer it cost $100 to fill a prescription that actually cost $60, allowing the pharmacy benefit manager to pocket the extra $40. The fine print in the contracts often allows it.

The spread is widespread. A recent report by the Ohio state auditor noted that the spread on generic drugs had cost that state's Medicaid plan $208 million in a single year — 31 percent of what it spent.

Sure enough, when she got the contract, Bartlett found that the state plan had fallen victim to the spread.

[Read More]

Tuesday, October 2, 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, September 28, 2018

Abolishing Drug Rebates May Push Consumer Drug Costs Higher

Debates about PBMs can be confusing in large part because their role is generally not well understood, and also because the drug system is so Byzantine. Groups like Express Scripts or CVS Caremark--to name two of the demonized PBMs--negotiate with drug manufacturers to extract rebates for certain drugs in exchange for putting the manufacturer’s drug on an insurance plan’s formulary.

Radical transparency in pharmacy benefits management
starts with training and education. Click here to begin yours.
If a PBM does not get on a plan’s formulary, the manufacturer loses sales and market share. The Data show that manufacturers need not provide much of a rebate for drugs that are still on patent and have few rivals, but they tend to give larger rebates when they have less leverage in negotiations regarding drugs with several possible substitutes--either generics or simply drugs with comparable effects.

These rebates are tantamount to discounts off the drug manufacturer’s list price. PBMs do not keep the entire rebate that they negotiate: The lion’s share goes to insurers, which allows them to keep premiums lower.

Tyrone's Commentary:

It's true rebates can reduce net prices. The burden, however, is on self-insured employers to extract those rebate dollars from the PBM and to not allow the non-fiduciary PBM to profit from manufacturer revenue or rebates. Because they tend to be more sophisticated purchasers, insurers are better at keeping rebate dollars than are self-insured employers. How well a PBM performs depends largely on the sophistication level of their clients. If the self-insured employer is unsophisticated, the non-fiduciary PBM and any benefits consultant whose interests are misaligned will feast off hidden cash flow. These cash flows are hidden in the employers' final plan costs thus equate to a service.

[Read More]

Thursday, September 27, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 238)

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 26, 2018

Gilead to launch generic versions of its hepatitis drugs

Source:  https://nu-retail.com/mavyret-antitrust/
Gilead Sciences Inc said on Monday it plans to launch generic versions of its hepatitis C drugs in the United States, at a time when regulators are looking to lower healthcare costs.

The drugmaker’s generic version of drugs such as Harvoni and Epclusa, which raked in combined sales of $831 million in the quarter ended June 30, will be launched via a newly created subsidiary Asegua Therapeutics LLC.

Gilead said the low-cost variants of the drugs will be available at a list price of $24,000 for the most common course of therapy from January.

Tyrone's Commentary:

While this move should be applauded, let's not kid ourselves. It was the launch of Mavyret which has driven the manufacturing of the generic (biosimilar) versions for Harvoni and Epclusa. Competition and sophisticated purchasers drive lasting change in Rx cost containment.

U.S. healthcare companies, ranging from insurers to drug retailers, are stepping up efforts to combat rising drug prices that have been widely criticized by regulators.

[Read More]

Tuesday, September 25, 2018

Fiduciary rule revival: Should it apply to pharmacy benefits managers?

The $280 billion drug-benefit industry has fought off efforts by a number of states to impose a fiduciary standard by arguing that U.S. employment law takes precedence. But the federal government could try and overcome that resistance with new regulation, or press Congress to solidify such a change through legislation.

Click to Learn More
Some of the biggest players in the industry have warned that a fiduciary standard could be deeply damaging to their business. Express Scripts Holding Co., which agreed to be bought by health insurer Cigna Corp. this year, said in a 2015 filing that a fiduciary rule “could have a material adverse effect upon our financial condition, results of operations and cash flows.”

Tyrone's Commentary:

The Pharmaceutical Care Management Association or PCMA is 'the' trade arm for large PBMs like Express Scripts, Optum, CVS Health and others. Nothing comes out of that camp which hasn't first been vetted by its membership. Stephanie Kanwit, outside counsel for the trade group said and I quote, "PBMs aren’t fiduciaries for their customers and they don’t want to be.” This isn't true as a handful of PBMs do want to put their clients' interests first even above their own; meaning they don't benefit at all from spreads, manufacturer revenue or poor clinical management. The law of common sense tells us that if a vendor's fees go down then so too does the client's cost.

Benefit managers don’t believe a fiduciary designation will lower drug costs, said Stephanie Kanwit, outside counsel for the trade group Pharmaceutical Care Management Association. They’re responsible for honoring a contract, she said. “It’s an idea whose time should never come,” she said. “PBMs aren’t fiduciaries for their customers and they don’t want to be.”

[Read More]

Thursday, September 20, 2018

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 237)

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 18, 2018

Why payers are gobbling up PBMs

With the OK from the Justice Department, Cigna's nearly-final takeover of Express Scripts moves closer to the end of an era when standalone pharmacy benefit managers dominated the industry.

Click to Learn More
Pending remaining state approvals for that $67 billion pact and the expected clearance of the CVS-Aetna megamerger, the three largest PBMs will all be hitched to health plans. UnitedHealth created its own in 1990 with OptumRx.

The crowded landscape has drastically changed from just a decade ago when PBMs were scooping up competitors and morphed the sector into one dominated by a few behemoths controlling the prescription drug benefit for millions of Americans.

Tyrone's Commentary:

And I quote, "The black box model is under scrutiny," Tanquilut said. "It’s better for them to be embedded. You can kind of hide your economics." In a June 6, 2018 blog post I wrote,"if integrating the medical and pharmacy benefit requires that you relinquish flexibility and cost controls, the disadvantages of integration far outweigh the advantages."

"Drug pricing is becoming a mainstream national issue," Brian Tanquilut, an analyst with Jefferies, told Healthcare Dive. Tanquilut thinks the increased scrutiny has played a role in fueling these payer-PBM acquisitions.

PBMs decide which drugs they will cover each year for their members and, to get a preferred status, drug manufacturers agree to rebates or discounts. It's unclear how much of that savings actually makes it way back to patients. PBMs also use spread pricing — pocketing the difference between what they charge the pharmacy and what they bill their client.

"The black box model is under scrutiny," Tanquilut said. "It’s better for them to be embedded. You can kind of hide your economics."

[Read More]

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.

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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]