What's your decision flow process?

As a fiduciary-model PBM, free education is a core part of TransparentRx's strategy. Think about it, we win when clients are educated and our competitors or non-fiduciary PBMs win when clients are illiterate. 

I'm often asked, "why do you give away valuable information for free? Aren't you just shooting yourself in the foot? 

The answer is no; watch the video to learn why. HINT: A lot of people watch Bruce Lee movies but that doesn't mean...By the way, I took this clip from my favorite televison show Billions.

If you have to ask what's the difference between a fiduciary-model PBM and a transparent PBM then for all intents and purposes you are illiterate. Non-fiduciary PBMs generate the bulk of their free cash flow from uneducated purchasers. Don't be a stock jockey or better yet don't hire one! Learn the ins and outs of managing pharmacy benefits.

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 212)

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.

Clinical Reviews | An underused way to save big on pharmacy benefits

CLICK TO WATCH!

Historically, brokers and consultants have helped employers manage the cost of pharmacy benefits by focusing on negotiating pricing arrangements for drugs through discounts and rebates. As long as pharmacy benefit managers (PBMs) pass through most or all of the rebates and discounts to employers — especially for specialty drugs, which can cost thousands of dollars per script — employers should save a significant amount from retail pricing.

Tyrone's Commentary:

Cost resulting from a claims repricing most often tells only part of the story. Self-insured employers and their consultants must also consider which PBM proposal promises better utilization and product mix. Clinical information, utilization and product mix, is sometimes more important than the repriced claims! Ignore it or not pay it enough attention and the result will be wasteful spending and poor outcomes on both the pharmacy and medical side. 

How would you know which PBM proposal is best? The contract language will tell you which option is best that's how. Don't rely solely or too heavily on repriced claims data it is fools gold. Of course, results will vary based upon the decision-maker's level of industry knowledge and negotiating skills. Sophisticated purchasers who know the ins and outs of PBM revenue models and contract loopholes will fare far better than those who are "picking it up" as they go. 

Even if a self-insured employer wins back all manufacturer dollars (rebates) and eliminates all spread pricing including back-end fees a non-fiduciary PBM could still shift their hidden fees to the clinical side, for example. So while many self-insured employers have their front doors locked, non-fiduciary PBMs are sneaking in through your back and basement doors. Caveat Emptor. 

While this strategy helps save money and should continue to be used, there’s another tremendous opportunity that many employers are leaving on the table: reviewing drug formularies and claims from a clinical perspective. This practice can help plan sponsors determine the lowest net cost for a treatment.

[Read More]

U.S. spending on drugs will grow faster than on other health-care services over the next decade

Learn how to manage pharmacy benefits efficiently

Drug spending skyrocketed in 2014 and 2015, driven largely by the use of a new generation of curative therapies for hepatitis C. When national health spending data was released showing a 1.3 percent increase in spending on prescription drugs in 2016 — a small fraction of the increases in previous years — a pharmaceutical lobby spokeswoman highlighted the trend as evidence of the “nation's competitive marketplace for medicines.”

Tyrone's Commentary:  Are you learned or have you decided to just "pick it up" along the way? The latter will cost you.

The new analysis suggests the low rate of increase will not last. CMS actuaries said the secret rebates that manufacturers negotiate with health plans have helped temper the growth of prescription drug prices and spending in recent years but will not contribute as much in the future. The prescription drug data does not include drugs administered in physicians' offices or in hospitals.

[Read More]

10 Steps to Improving Your Company's Pharmacy Benefit Management Results

Managing the pharmacy benefit efficiently is no easy task. It requires quite a bit of time, effort and skill to do it right. Anyone with business training can look at a P&L statement and determine whether or not a company made a profit. However, understanding the story behind the numbers requires a certain set of skills only a certified public accountant can provide, for example. The same can be said for pharmacy benefits.

Pick anyone from HR, finance or procurement and they will tell you succinctly the pharmacy cost trend is not sustainable. Ask these same professionals how to bend the trend (without increasing employee cost share, restricting access or reducing benefit levels) and you'll likely get crickets. You're probably thinking, that's why we hire brokers and consultants. I'll let the note Michael Critelli, former CEO at Pitney Bowes, sent to me address that point.

"I am pleased that you wrote the particular essay I downloaded. Many corporate benefits departments do not understand that they are overmatched in negotiating with pharmacy benefit managers, as are the "independent consultants" who routinely advise them. The first step in being wise and insightful is admitting what we do not know, and you have humbled anyone who touches this field."

For those interested in improving their company's pharmacy benefit management results and unafraid of unconventional concepts, here are 10 steps in the right direction.

1. Get better educated

“The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.” — Alvin Toffler. Education is the most logical and effective foundation for achieving extraordinary results in pharmacy benefit management services.

In order to improve on the job execution and career growth, benefits consultants, finance managers, procurement and HR professionals must expand their PBM knowledge beyond a functional role and understand exactly how each domain works together within the pharmacy distribution and reimbursement system. Don't be a spendthrift learn the intricacies of managing pharmacy benefits like a pro.

2. Embrace reverse auctions

Click to Learn More

I liken manual scoring and paper-based RFPs to typewriters and the Startac cell phone. Each served its purpose but their day of usefulness have long passed us. Non-fiduciary PBM companies have learned how to leverage the purchasing power of the
unsophisticated plan sponsor purchaser to their financial advantage. There are several ways to learn about the specific services and fees of those PBMs.

One, the request for information (RFI) is a shorter less-structured instrument compared to RFPs. It asks a handful of PBMs to answer some very targeted questions. The responses to those questions should be scored automatically based upon a set of  predetermined criteria. When coupled with an automated reverse auction, the RFI can be a powerful tool in combating high PBM service fees.

PBMs have gotten so good at RFPs that they've just become a marketing tool for the PBM. The contract [language] is the white elephant purchasers seem to ignore or not pay nearly enough attention.

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 211)

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.

Fiduciary PBMs emerge as response to consolidation of Rx dispensing, concern over conficts of interest and need for deeper clinical expertise

With rising prescription drug costs considered the nation’s fastest-growing component of health care, pressure has been mounting on pharmacy beneft managers (PBMs) to help Corporate America rein in such spending. But at a time when transparency has never been more important across the self-insured community and beyond, a struggle over stewardship is brewing.

Click to Learn More

Gary C. Becker, CEO of ScriptSourcing, estimates that less than 2% of the nation’s roughly 300 PBMs operate without conficts of interest. In contrast to a traditional PBM, he says all manufacturer revenue in a “fduciary” PBM contract belongs to the employer – adding “there will be no spread pricing.” Leaders in this nascent feld of expertise include US-Rx CARE, TransparentRx and OrchestraRx, among others.

These market disruptors could help bend the Rx cost curve in ways that self-insured employers never imagined, crow proponents of this model. Becker says it’s analogous to scores of employers transitioning from retail to institutional pricing for their 401(k) investment fees. His point is that employers have an opportunity to mirror these cost savings by working with a fduciary PBM.

Different paths to cost savings

However, employers shouldn’t expect this new way of managing prescription drugs is necessarily a silver bullet. Keith McNeil, co-founder of United Benefts Advisor partner frm Arrow Benefts Group, much prefers the fduciary PBM model, though cautioning it doesn’t automatically mean that such programs save money.

Tyrone's commentary:

Because most purchasers of PBM services are unable to uncover all the hidden cash flows baked into a non-fiduciary PBM arrangement, Keith's statement is a very dangerous one to make. DIR fees, while indirect, are hidden cash flows very few plan sponsors take into consideration, for example. 

Another example, clawbacks, like DIR fees, lead to patients overpaying at the point-of-service with the non-fiduciary PBM pocketing the difference. How many purchasers are truly factoring in these hidden cash flows when forecasting final plan cost? 

My final point; when conducting a side-by-side claims analysis it is a disservice to plan sponsors for brokers and consultants to determine "best price" with only the claims data before them. Instead brokers and consultants must view the data holistically and ask, "WHAT SHOULD THE FINAL PLAN COST FOR THIS GROUP HAVE BEEN?" A claims analysis or re-pricing looks primarily at historical price which is just one driver of pharmacy costs. It doesn't always take into account poor product mix or bad utilization from which non-fiduciary PBMs intentionally profit. 

For the record, a fiduciary-model PBM is prohibited from profiting from poor utilization or product mix. In fact, punitive damages kick in if a fiduciary PBM does profit from these drivers. Hence, the reason most (99%) PBMs don't accept full fiduciary responsibility and those who claim to offer a fiduciary standard provide only a modified version.

Three drivers of pharmacy costs (utilization, product mix and cost share) contribute mightily to wasteful Rx spending, yet are oft-over looked when comparing PBM proposals. I wonder if Keith considered these drivers of pharmacy cost before saying, "a fiduciary-model PBM doesn't necessarily deliver a better price?" I don't know but I will ask him.

Hidden costs

The trouble with traditional PBM contracts is that they abdicate any fduciary responsibility, according to Becker, whose frm helps self-funded employers mitigate prescription drug claims. “Who would ever hire someone to mitigate prescription spend who is not going to act in their clients’ best interests?” he asks rhetorically.

Gary C. Becker, CEO of ScriptSourcing, estimates that less than 2% of the nation’s roughly 300 PBMs operate without conficts of interest. In contrast to a traditional PBM, he says all manufacturer revenue in a “fduciary” PBM contract belongs to the employer – adding “there will be no spread pricing.”

[Click to download full article]

Generic Hepatitis C Drugs Begin to Emerge

Click to Learn More

The cost of hepatitis C virus (HCV) antivirals has been at the forefront of health care spending conversations for years. Although it has slowed, spending on the blockbuster drugs remains high. Despite the curative ability of the treatments, it is likely that a significant need for antiviral drugs will remain into the foreseeable future due to the prevalence of undiagnosed HCV cases.

A recent Vizient Drug Price Forecast outlined the top drivers of specialty pharmacy spending, one of which being HCV. The cost of HCV drugs is projected to increase 2.02% in 2018, which is slower than the past few years due to increasing competition and lower-cost options.

Tyrone's Commentary:

Rebates are not "free money" thus don't justify the higher price tag compared to lower cost Hep C treatments which do not pay rebates. Because it essentially eliminates the PBM mark-up, AbbVie’s pricing strategy for its Hep C drug Mavyret is disruptive to the traditional PBM revenue model, for example. Instead of paying a rebate AbbVie prices it [rebate] back into the list price in the form of a significant list price discount. The same is true of forthcoming biosomilars and the result for plan sponsors is lower plan costs. That is if you don't take the bait or rebate dollars. 

Natco Pharma recently announced it filed an Abbreviated New Drug Application (ANDA) for sofosbuvir tablets, 400-mg, according to a press release.

Sofosbuvir is currently marketed by Gilead Sciences under the brand name Sovaldi. Sofosbuvir was the first blockbuster HCV drug to receive approval in December 2013, shortly followed by Gilead’s ledipasvir/sofosbuvir (Harvoni) in October 2014.

Natco said it is the first to have filed a complete ANDA and expects to receive 180 days of exclusivity after final approval.

[Read More]

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 210)

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.

6 Pillars of Pharmacy Benefit Plan Design

In less than two decades, transparent third-party prescription claims adjudication has evolved into the extremely profitable and opaque pharmacy benefit management industry of today. PBMs make most of the value decisions that plan sponsors are unqualified for or choose not to make. This wouldn't be a problem except for the fact that most PBMs are non-fiduciary, which means their interests are not aligned to those of their clients.

Worse yet, non-fiduciary PBMs leverage the purchasing power of unsophisticated plan sponsors by negotiating with drugmakers and pharmacies for their financial benefit. Before non-fiduciary PBMs learned they could leverage the purchasing power of unsophisticated purchasers for their own financial gain, they focused on cost-efficiency or getting the best outcomes for the lowest cost. In many cases, the focus has shifted to promoting the products that are most profitable to the PBM.

Smart purchasers of PBM services want more control over their plan design not less. If this is you, here are six pillars upon which to design your pharmacy benefit plan.

I.  Evaluate your internal resources and pharmacy expertise

If you're reading this and work for a self-funded employer never retain the services of a PBM or a PBM consultant who benefits when your pharmacy costs increase. Should you do so, never leave them completely to their own accord.

1. Do you have the expertise within your company to design the pharmacy benefit plan? Or do you need pharmacy benefits education or the services of a pharmacy benefits consultant? 
2. How do you want to be involved in the management of the plan design after it is set up? 
3. Do you have the expertise and resources to manage the plan design or do you need to build in the incentives for the PBM to manage your program? 

In other words, hire consultants not because you lack the requisite knowledge to design or manage the pharmacy benefit plan in-house, but because you lack the time or human capital to go it alone. Plan sponsors might be surprised to learn that many so called advisers know little more than they do when it comes to pharmacy benefits. Who is watching the watcher?

A costly PBM trick: set lower copays for expensive brand-name drugs than for generics

In 2014, patients buying Lipitor had lower copays than those buying generic atorvastatin, even though the generic was much cheaper overall. This finding was so unexpected that we wondered if we had made a mistake, and ran the numbers multiple times. It was the real deal.

Tyrone's Commentary:

If a non-fiduciary PBM is permitted to self-govern, this will eventually happen to you - if it hasn't already.

How could that happen? It turned out that Pfizer had partnered with pharmacy benefit managers to ensure that its more-expensive Lipitor had a lower copay than less-expensive generic atorvastatin. This might have saved consumers a few dollars, but it boosted the overall cost of the drug. Deals like that can make it difficult for generic manufacturers to enter a competitive market and drive prices lower.

Click to Read

If an employer serves as its own pharmacy benefit manager, it has all the incentive it needs to drive down the costs of drugs for its employees. So it’s no wonder that large employers such as Coca-Cola, Verizon, and IBM, which collectively spend $20 billion a year on health benefits, formed a coalition to devise means to buck the influence of pharmacy benefit managers.

American health care is like a pie, with big bites taken out of it by myriad middlemen, including pharmacy benefit managers. These companies could play a highly constructive role in helping lower drug prices by promoting competition for drugs that provide the best value and are then preferred in the drug benefit plan. But as long as pharmacy benefit managers operate and negotiate prices in secret, it seems unlikely that they can be positive agents for change.

If they fail to lift the veil and usher in transparency, the revolt by employers, insurers, the market, and the federal government represents an existential threat to their role in the health system.

[Read More]

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 209)

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 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. effective acquisition cost (EAC)
• Why mail-order and preferred pharmacy networks may not be the great deal you were sold

See you Tuesday March 13 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.

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 208)

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.